Realty developer Lodha, listed at Macrotech Developers, is set to exceed its full year guidance of Rs 17,500 crore worth Gross Development Value (GDV) for new project additions in the current financial year, said a top company official.
The company has already added projects with development value of Rs 14,300 crore or over 80% of its full year guidance in the first half of the financial year and expects to surpass the guidance soon, Abhishek Lodha, MD & CEO, Macrotech Developers, told ET.
“Given how much we have already achieved in the first half and the pace of new project additions and strengthening the pipeline of business development opportunities, we are well on our way to exceed our full-year guidance,” Lodha said.
The company will continue to operate with its ‘supermarket’ strategy that involves undertaking a development every 3-5 kilometres across key core property markets including Mumbai and Pune.
“The ‘supermarket’ strategy is part of our diversification. We believe that Indian homebuyers typically do not shift beyond 3-5 kilometres away from where they currently live. For a good supermarket, the catchment area is 3-5 kms and one needs to be present in the vicinity to capture the market share,” Lodha added.
In September quarter, the company added two more projects with 1.2 million sq ft area worth Rs 2,300 crore in addition to five new projects added in June quarter with a potential value of Rs 12,000 crore to its portfolio. According to Lodha, the large number of projects tied up across several micro-markets of the cities that it operates in provide the company an opportunity to grow on a granular basis in a predictable manner.
During the first half of 2023-24, the developer has recorded its best-ever first half pre-sales of Rs 6,890 crore despite no new location launches. Lodha believes that indicates the company’s ability to consistently grow pre-sales in a predictable manner with low variability without being dependent on any particular single location or market segment or a project.
Along with robust pre-sales numbers, the company has been able to command around 3% higher prices at its projects in the first half of the financial year and expects to achieve 6-7% higher prices in 2023-24.
“We’ve guided for 20% growth, we expect 6-7% to come from pricing and the remaining 13% from volume. Of this, 5-6% of the volume will come from existing locations, and the balance 6-8% will come from new locations,” Lodha added.
The company continues to focus on reducing leverage along with business development and is on track to achieve its goal of net debt-equity of less than 0.5x and net debt less than 1x operating cash flow in 2023-24. During the quarter ended September, the company reduced its net debt by Rs 540 crore to Rs 6,730 crore.
ET reported last week that Lodha raised Rs 650 crore in debt facilities from Standard Chartered Bank and Deutsche Bank for three years to refinance its high-cost debt. Standard Chartered Bank provided Rs 245 crore at 9% payable annually, while Deutsche Bank provided Rs 405 crore at 9.5% payable quarterly.
According to Lodha, the housing demand conditions continue to strengthen on the back of affordability and consumer confidence. Persistent consumer desire to own a quality home with superior set of amenities from branded developers continues to drive consolidation benefiting branded players like the company.
Rising competition among mortgage lenders along with a pause on interest rate hikes by the Reserve Bank of India and the expected downward trajectory for rate cycle in 2024 means that the market has already seen the peak of mortgage rate, he said. Likely reduction in mortgage rate as well as government’s affordable housing incentives will act as a further tail wind for the demand.
