Hold Mahindra Lifespace Developers; target of Rs 300: ICICI Direct

ICICI Direct's research report on Mahindra Lifespace Developers

Mahindra Lifespace Developers (MLD) reported a weak H1FY21 performance. H1FY21 sales volume saw de-growth of ~41% YoY to 0.24 million square feet (msf) (~16% decline in Q2 at 0.16 msf) with sales of Rs 154 crore, down ~32% YoY (~8% YoY growth in Q2 at Rs 115 crore), with Covid-19 led impact on execution, labour availability. H1FY21 residential revenues de-grew 87.4% YoY to Rs 69.1 crore with EBITDA loss of Rs 42 crore. Integrated Cites & Industrial Clusters (IC & IC) segment revenues declined 24.9% YoY to Rs 61.6 crore with EBITDA of Rs 34 crore, down 12.8% YoY.

Outlook

We like MLD given its strong parentage, the management’s focus on expanding its overall scale of operation and a comfortable balance sheet. The new land purchases could enable it to scale up its residential business, which otherwise saw lethargic movement. However, we would await fructification of such deals and traction thereof, before turning constructive. Hence, we maintain our HOLD rating on MLD with a target price of Rs 300.

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