Macrotech Developers Ltd’s, erstwhile Lodha Developers, Rs 2,500-crore IPO will open for subscription on April 7, 2021. The corporation has fixed the value band of Rs 483-486 per share. Realty important Macrotech Developers will cut down net debt by 24 per cent to Rs 12,700 crore post its initial public offer you. The corporation has a core company of residential actual estate developments with a concentrate on reasonably priced and mid-earnings housing along with the improvement of logistics and industrial parks. According to analysts, the realty sector is taking a U-turn from the final 5-year slowdown.
Strong housing demand has been observed right after the realty sector was hit by the COVID-19 pandemic. Lodha developers reported income of Rs 2,920 crore with EBITDA of 770 crores in 9MFY2021. The company’s net debt of Rs 16, 700 crore as of December 2020, is a quite higher quantity, and the corporation is focusing on deleveraging its balance sheet from the proceeds of the IPO, mentioned Yash Gupta Equity Research Associate, Angel Broking Ltd. “We expect the sector to do well in coming years and top players to gain market share from these levels. We have a positive outlook for this IPO,” Gupta mentioned.
Lodha Developers 3rd IPO try
This is the third time when the realty developer has come up with an initial public offer you. In September 2009, the Lodha Developers had attempted to raise Rs 2,800 crore and later in 2018. However, the worldwide recession forced it to shelve the IPO in 2009, though it retreated in 2018 due to adverse situations in the sector. The corporation has a robust presence in Mumbai Metro regions (MMR). However, the company’s debt is a important trigger of concern. “The business in which the company operates is highly capital intensive and heavy indebtedness will be a hurdle for future financing,” Abhay Doshi, Founder, UnlistedArena.com, dealing in Pre-IPO & Unlisted Shares, told TheSpuzz Online.
He also mentioned that even on the basis of P/BV and D/E metrics, the corporation is priced at pricey valuations as compared to its peers operating in the similar regions. “In my opinion, there are better options available in this space with a sound balance sheet which may offer comfortable risk-reward to venture into real estate themes which seems to be bottoming out. Owing to big issue size, heavy debt and increase in covid cases, the IPO may lack fancy of investors,” Doshi mentioned.
Lodha Developers group corporation Macrotech IPO will open in the midst of the second wave of COVID-19 issues. For FY18 to FY20, Revenue CAGR has been -5.34%, net profit CAGR has been -36.5%. The problem is priced at 26.3x P/E and 5.0x P/B (FY20 EPS). As of December 31, 2020, the debt to equity ratio was 3.87x which was very higher. This is a quite higher debt to equity ratio which leaves small to no space for the corporation to climate any unforeseen events, mentioned Aditya Kondawar, Founder, COO, JST Investments. “Taking into account all of this, we feel that one should look at other listed players that are available with minimal debt,” he told TheSpuzz Online.
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