Lodha IPO: Deleveraging post listing positive for realty sector, says Jefferies

Macrotech Developers Ltd, formerly Lodha Developers, is eyeing the launch of its Rs2,500 crore IPO in April. (Photo: iStock)

2 min read . Updated: 24 Mar 2021, 10:43 AM IST Harsha Jethmalani

This is the third attempt by the company to garner funds via the IPO route. The company shelved it IPO plans in 2009 and 2018 citing unfavorable market conditions

MUMBAI: Macrotech Developers Ltd, formerly Lodha Developers, is eyeing the launch of its Rs2,500 crore initial public offering (IPO) in April. The company has filed a draft red herring prospectus and is hoping to raise Rs500 crore through a pre-IPO placement.

Analysts at Jefferies India Pvt Ltd are of the view that company's IPO-led deleveraging will be positive for the realty sector.

TRENDING STORIESSee All

"As of Dec'20, Lodha's net debt was Rs18,100 crore and gearing was 3.8 times, both are highest among our property coverage. Lodha's scale and balance sheet status implies that a potential IPO and consequent deleveraging could be seen as a positive for the housing sector / developer space," it said in a report on 23 March.

It should be noted that this is the third attempt by the company to garner funds via the IPO route. The company shelved it IPO plans in 2009 and 2018 citing unfavorable market conditions.

"Lodha's residential pre-sales have declined from Rs8,100 crore in FY18 to Rs6,600 crore in FY20; even then company has had the highest pre-sales of any developers over FY14-20. Lodha is Mumbai centric (97% of 29mn sf ongoing projects) and residential (92%) and likely to stay that way, given forthcoming pipeline following a similar Mumbai / residential dominated mix."

The Mumbai-based developer saw 58% of its Rs9,900 crore sales over FY20-9MFY21come from the affordable and mid-income segments, said the Jefferies report.

It should be also noted that listed real estate developers focused on the Mumbai and Pune regions have seen robust sales in the December quarter. This was on the back of temporary reduction in stamp duty, announced by the government of Maharashtra last year. Analysts say it remains to be seen whether this kind of sales trajectory continues once stamp duty reduction in reversed after March.