Macrotech to continue focus on alliance-led growth strategy, says CEO Abhishek Lodha

Lodha Group, listed as Macrotech Developers, will continue to pursue capital-light growth strategy by entering joint ventures and alliances to develop projects as the company focuses on efficiency and execution to drive value creation, said a top company executive.

The developer has added four new projects with a combined area of 2.2 million sq ft and an estimated gross development value potential of Rs 3,100 crore during the September quarter.

“With this, we have added around Rs 9,300 crore of gross development value (GDV), which is nearly 62% of our full-year guidance of about Rs 15,000 of GDV addition… The consolidation in the market continues at an accelerated pace providing us with significant joint development agreement (JDA) opportunities across all our markets of interest,” said Abhishek Lodha, MD & CEO, Macrotech Developers.

According to him, on the back of strong attractiveness of the Lodha brand to land owners and the developer’s ability to turnaround land assets into cash, the company’s robust business development pipeline continues to strengthen with each passing quarter.

The company’s new addition of projects in September were in addition to picking up 14 new land parcels between March 2021 and June 2022, through joint development pacts with development potential of around 14 million sq ft worth nearly Rs 21,000 crore.

For the quarter ended September, the company has reported 28% rise in net profit of Rs 367 crore, excluding exceptions items and forex, on the back of Rs 1,765 crore worth revenue from operations.

During the quarter, the company has made a provision of Rs 1,177 crore towards reduction in expected realisable value interest accrued and loans extended to its UK subsidiary.

The company has posted its best-ever second quarter pre-sales performance at Rs 3,148 crore, showing 57% on-year growth. With this performance, the company has achieved pre-sales of Rs 6,004 crore in the first half of 2022-23, which is its best-ever first half in terms of pre-sales.

According to Lodha, the company has achieved its second Rs 3,000 crore performance within the 2022 calendar year despite this being the seasonally weakest quarter due to monsoons, an inauspicious period of Pitru Paksha and also in spite of the rising home loan rates.

“This shows the strength of housing demand for tier-1 developers in India and indicates the start of a long-term upcycle for quality housing in the country. The festive season has begun strongly and the early trends suggest a robust second half of the year,” Lodha said.

The company continues to focus on reducing leverage along with strong business development and is on track to achieve its goal of a net debt-equity ratio of 0.5 times and net debt of less than 1 times operating cash flow.

During the quarter, the company reduced its net debt to Rs 8,795 crore and has also reduced its interest cost to 9.9%, a 60 bps reduction in the first half of 2023 in spite of significant 190 bps increase in benchmark policy rates.

Separately, the company has also approved to raise up to Rs 3,000 crore through issue of non-convertible debentures to diversify the pool of debt capital and achieve reduction in cost of funds.

“Despite challenging economic environment in the UK, we expect to further repatriate Rs 1,000 crore from the UK to India in 2023, which will strengthen the cash flows of the Indian business. With this repatriation, we will have no further investment outside India and will solely focus on capitalising on the immense growth opportunities that we see in India for the next 10-15 years,” Lodha added.

The company has also fully repaid the $225 million bonds, six months ahead of its scheduled maturity and have no further obligation on the Indian balance sheet in relation to its UK investment. In addition, the company has repatriated nearly Rs 100 crore from the UK to India.

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