Started in 1995, Lodha Macrotech 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 financial years 2014 to 2020. Company develops real estate across the residential and commercial sectors in the Mumbai Metropolitan Region (the 'MMR'), Pune and London. Company's customer-centric business model focuses on designing and developing company's '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, Singapore and USA. In company's commercial portfolio, company's office space projects comprise corporate offices, IT campuses and boutique office spaces, which are concentrated in suburban locations. Company's retail projects focus on high street retail with shopping and entertainment options for the local community. As of December 31, 2020, company have 91 completed projects comprising approximately 77.22 million square feet of Developable Area, of which 59.13 million square feet is in affordable and mid-income housing, 12.15 million square feet is in premium and luxury housing, 5.21 million square feet is in office space and 0.74 million square feet is in retail space. The company also have 36 ongoing projects comprising approximately 28.78 million square feet of Developable Area, of which 23.57 million square feet is in affordable and mid-income housing, 2.80 million square feet is in premium and luxury housing, 2.38 million square feet is in office space and 0.04 million square feet is in retail space, and 18 planned projects comprising approximately 45.08 million square feet of Developable Area, of which 35.48 million square feet is in affordable and mid-income housing, 2.04 million square feet is in premium and luxury housing, 7.13 million square feet is in office space and 0.43 million square feet is in retail space, as of December 31, 2020. In company's logistics and industrial park portfolio, company have an ongoing and planned development of approximately 290 and 540 acres, as of December 31, 2020, respectively. 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, 2020, company has sold 200 units and achieved total Sales of GBP 208 million. In addition to company's ongoing and planned projects, as of December 31, 2020, we have land reserves of approximately 3,803 acres for future development in the MMR, with the potential to develop approximately 322 million square feet of Developable Area. As of As of December 31, 2020, company's business had 2,694 permanent employees including 85 in senior management positions, 542 in middle management positions and 812 in junior management positions. Approximately 1,146 of company's employees have professional educational backgrounds such as engineering, chartered accountancy and business administration, among others. 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 financials almost static, RoNW is 11.62% for last three fiscals and issue is priced at P/E of around 30 as per FY20 earnings and in current year upto 9M of FY21 company has posted losses similar to other real estate companies and also company has very high debt. Currently once again pandemic situation is worsening and this may have more adverse effect on Real Estate sector, which is going from bad phase. So it may take at least 6-9 months to recover and so near future is not so good for this sector. So we give AVOID rating to this IPO.
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