Started in 1995, Lodha Developers Limited, is Mumbai based company engaged in Real Estate Development in India. As per Liases Foras, they are the largest real estate developer in India by residential Sales for the nine months ended December 31, 2017 and financial year 2017. Company develops real estate across the residential and commercial sectors in the Mumbai Metropolitan Region (the 'MMR'), Pune and London. In residential portfolio, company is present across multiple price points with unit values ranging from Rs 3.50 million to Rs 590 million. In the commercial portfolio, company develops office and retail projects as income generating assets on lease model and sale model, with an increasing focus on the former. Company's customer-centric business model focuses on designing and developing our 'branded products' to address consumer needs across locations and price points. Company's brands include 'CASA by Lodha' for affordable housing, the 'Lodha' and 'Lodha Luxury' brands for premium projects, and the 'iThink', 'Lodha Excelus' and 'Lodha Supremus' brands for office spaces. Company's in house sales team is supported by a distribution network of multiple channels across India as well as key NRI markets such as Gulf Cooperation Council, United Kingdom, Hong Kong, Singapore and USA. As of December 31, 2017, company had 37 ongoing projects, of which 35 projects were in India and two were in London. These projects accounted for a Developable Area of 33.80 million square feet, of which 31.95 million square feet represented projects located in the MMR. As of December 31, 2017, they also had 22 planned projects in India with a Developable Area of 64.21 million square feet, of which 62.74 million square feet is located in the MMR. Company's residential portfolio comprises affordable housing and premium housing consisting of luxury, high-end and aspirational developments. They also develop office and retail projects across markets as standalone developments and in mixed-use format. Overseas, company is developing two residential projects in London, including Lincoln Square on Carey Street and 1 Grosvenor Square in Mayfair. As of December 31, 2017, company has sold 114 units and achieved total Sales of GBP 277.65 million Company has completed affordable housing projects in Thane and Dombivali with 20.80 million square feet of Saleable Area in the last five years. As an early entrant in the affordable housing category, the large portfolio of affordable housing projects includes Palava (in Dombivali-Kalyan region), Amara (Thane), Upper Thane (Thane) and Codename Bulls Eye (Mira Road). The affordable housing developments accounted for Sales of Rs 27,517 million, which was 39.5% of the Sales from India Operations by value in Fiscal 2017. In the luxury category, company is developing several luxury apartment projects such as the World Towers at Lower Parel, Trump® Tower Mumbai at Worli and Lodha Altamount at Altamount Road. In the high-end residential category, company is developing projects such as The Park at Worli, Lodha Venezia at Parel, Lodha Fiorenza at Goregaon and New Cuffe Parade at Wadala. In the aspirational residential category, company is developing several projects, including Lodha Eternis at Andheri, Lodha Luxuria Priva at Thane, Lodha Splendora at Thane and Lodha Belmondo at Pune. In the commercial portfolio, company's office space projects comprise IT campuses, high-end corporate offices and boutique office spaces, while the retail projects include malls and other high street retail shopping options to residents in their projects. Company plans to develop a 120-acre logistics and industrial park that is strategically located near the Jawaharlal Nehru Port and the proposed international airport in Navi Mumbai. In addition to the ongoing and planned projects, as of December 31, 2017, company had land reserves of approximately 4,450 acres for future development in the MMR with the potential to develop approximately 385 million square feet of Developable Area. As of December 31, 2017, company's India business had 3,726 permanent employees including 222 in senior management positions,592 in middle management positions and 1,163 in junior management positions. Approximately 1,919 of total employees have professional educational backgrounds. In addition, the United Kingdom business has 50 employees. As per financial performance, ICFL has posted total income/net profits of Rs. 396.91 cr. / Rs. 112.13 cr. (FY14), Rs. 528.06 cr. / Rs. 149.04 cr. (FY15), Rs. 644.05 cr. / Rs. 191.64 cr. (FY16) and Rs. 719.92 cr. / Rs. 210.80 cr. (FY17). For upto Q3 of FY18, it has reported net profit of Rs. 164.08 cr. on total revenue of Rs. 585.95 cr. So company has posted consistent growth over last couple of years. ICFL has posted an average EPS of Rs. 25.53 and average RoNW of 11.62% for last three fiscals. Issue is priced at a P/BV of 2.17 as per NAV of 263.96 on 31.12.17. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of around 24. As per RHP, industry average P/E ratio is 28.66 and listed peers comparison shown in above table. So issue looks fully priced. On BRLM's front, five merchant bankers associated with this issue and have handled 58 public issues in the past three years. When we take recent 10 IPOs of each BRLM then out of those 6 issues opened below their offer price and 4 opened at par on listing dates. As per financials, company's growth is consistent and very good, RoNW is 11.62% for last three fiscals and issue is priced at P/E of around 24 as per latest earnings. Company is an NBFC with principal lines of business, namely corporate lending, SME lending, vehicle financing and housing financing. Last two business segments (Vehicle Finance & Housing Finance) are started in recent past and it may give further boost to company's growth, but increasing bond yields and FD rates may put pressure on margins. So we give "SUBSCRIBE FOR LONG TERM" rating to this IPO.
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