HDFC Securities has a buy call on Mahindra Lifespace Developers with a target price of Rs 635.

The current market price of Mahindra Lifespace Developers is Rs 538.25.

Time period given by the brokerage firm is year when Mahindra Lifespace Developers price can reach defined target.

"Mahindra Lifespaces has strong balance sheet and has been able to raise capital at competitive terms even during challenging times. With its focus on execution, it has been successful in attracting equity participation in both residential and industrial projects, thereby increasing efficiency in the utilisation of its risk capital. As the economic environment improves further, company is well positioned to benefit from the opportunities.
Mahindra Life had booked Rs 325 crore sales proceeds from Byculla land development rights in FY15, which had resulted in PAT of Rs 266 crore. Going ahead, with better sales from the residential segment coupled with moderate contribution from high margin land leases translating into better EBITDA margin, we expect net profit to grow robustly post FY18 and would surge to Rs 177 crore in FY20. We expect revenues to see robust growth post FY18 as its projects get operational. Similarly EBITDA margin would also see strong expansion over FY17-20E. We see 8 per cent revenue cagr and 21 per cent PAT cagr over the same period led by its Mahindra World Clusters at Jaipur and Chennai and higher sales from its residential units. Stock trades at nearly 14x FY20E earnings and 1.1x FY20 Book Value. Based upon nearly 1.4x Price/Book and nearly 18x FY20 earnings, we recommend Mahindra Life as BUY at current market price and add on dips to Rs 444 with target price of Rs 635 over the next 4-6 quarters," HDFC Securities said in a report.