LODHA - Macrotech Developers Limited Share Price

Management at Macrotech Developers Limited provided an optimistic outlook during the Q4 FY25 earnings call. The company anticipates continued growth underpinned by supportive monetary policies, with the Reserve Bank of India having already cut interest rates by 50 basis points, with expectations of further cuts throughout the year. India's economy is expected to grow approximately 6.5% in FY25, still among the fastest globally.

Key forward-looking metrics for FY26 include anticipated presales of INR 21,000 crores, reflecting a growth target of 20% over FY25's presales of INR 17,500 crores, which amounted to INR 176 billion for the full year, a 21% increase from the previous year. Consistency in their business model has been reinforced, having achieved record quarterly presales of INR 48.1 billion. Management highlighted an embedded EBITDA margin of approximately 33% for FY26, showcasing ongoing strong profitability.

New project launches are projected to add INR 25,000 crores in Gross Development Value (GDV). The company also aims to enhance its annuity income to approximately INR 4 billion by FY26, rising from INR 2.5 billion. The strategic shift towards mid to premium residential segments is expected to yield significant returns, particularly from Palava and Upper Thane, which are forecast to drive INR 8,000 crores in sales by the decade's end with EBITDA margins approaching 50%.

In operational updates, management expects to maintain a conservative debt-to-equity ratio below 0.5x, reflecting prudent capital management with net debt at INR 39.9 billion at fiscal year's end. The overall outlook remains positive, driven by sustained demand across diversified segments, bolstered by infrastructure developments around key projects.

Here's a summary of the major questions asked during the Q&A section of the earnings conference call along with detailed answers provided:

1. Question: "How are the margins in Mumbai South and Central versus the rest of your business? Can you give a qualitative comparison of the two?"

Answer: Our margins generally hover around 30% across our segments, including mid-income, premium, and luxury. There could be slight variations on an individual project basis, but overall, we maintain this margin standard consistently across our portfolio.

2. Question: "Can you help understand what's the mix of presales? Can you break it down to launch, under construction, completed projects?"

Answer: Our presales are increasingly granular, with approximately 25% to 30% coming from new launches. The remaining sales are primarily from sustained inventory, where ready-to-move-in (RTMI) properties contribute around 20%. This model allows us to maintain predictable sales across our portfolio.

3. Question: "When do you expect net cash collection to catch up with your presales growth?"

Answer: Typically, our collections lag by about a year behind our presales. The current cash collection was around INR144 billion this year, corresponding with last year's presales. This confirms our strong cash flow, keeping our net debt at a conservative 0.2x equity.

4. Question: "What drove your pricing down to 4% last year? Do you expect it to go back to 6% soon?"

Answer: The economic slowdown affected our pricing strategy last year, prompting a more conservative approach focused on profitability over aggressive price growth. Given the renewed economic momentum, we anticipate returning to a 6% growth in pricing moving forward.

5. Question: "Could you break down the sales contribution from Palava between the premium and mid-income segments?"

Answer: For this year, around 20% of our sales from Palava came from the upper mid-income and higher segments, with a price point of over INR1.5 crores. Our aim is to see this proportion increase as infrastructure in Palava improves.

6. Question: "How do you expect the individual micro markets to behave in terms of the 20% growth guidance for next year?"

Answer: Of the projected INR3,500 crores increase in sales, we estimate Mumbai will contribute INR1,000 to 1,500 crores, with Pune and Bangalore contributing equally. We anticipate steady growth across different projects based on our diversified portfolio.

7. Question: "How do you see the change in real estate demand among Grade A developers, especially with the stock market correction?"

Answer: Despite market corrections, Grade A developers, including ourselves, have shown strong presales. We see a continued consolidation in the real estate market, which favors established developers. Thus, we remain optimistic about our growth prospects regardless of segmental demand variations.

8. Question: "Do you think the base effect will impact the 20% presales growth moving forward?"

Answer: Our growth model is built on diversified operations across multiple segments, which should sustain our growth trajectory. We've managed to keep our growth robust not by relying solely on price hikes but by expanding our distribution and product offerings.

These answers offer insights into the company's operational strategies and market conditions as discussed during the earnings call.