Lodha plans data centre development in Palava, cites 'humongous opportunity' for cash flows

Lodha is planning to develop data centres at its Palava land parcel

Real estate major Lodha Developers (erstwhile Macrotech Developers) is planning a major push into developing and running data centres, centering around the state government-approved data centre centre park spanning 400 acres at the company's land Palava land parcel. Till now, Lodha has sold land parcels for data centres to major hyperscalers and data centre operators, such as Amazon and ST Telemedia.

The company's executive director- finance, Sushil Kumar Modi, said in an interaction with Moneycontrol that with India still underserved with data centre capacity, the data centre play is expected to provide significant topline and profits for the company in the longer term, with relatively modest investments. Besides, the state government's data centre policy is expected to deliver savings of upto Rs 9,000 crore over a 20 year-period, including GST and electricity duty waivers.

"We are now brainstorming ourselves that this is a new business opportunity for us where potentially while 3 gigawatt (GW) in capacity can be built on the 400 acre...We will continue selling some bit of land for data centres. But even if we so decide, let's say we do 250 megawatt (MW) over next five years...Per MW, you can earn around  Rs 10 crore to Rs 15 crore of profit per year. That means in a acre you can deliver anywhere between 8 to 10 MW. So every acre has a ability to deliver Rs 100 crore... 400 acres can itself deliver $5-10 billion," Modi observed.

He noted that annual profits from the data centre business, once the capacity reaches 250 MW, is expected to be Rs 2,500 crore, on investments of around Rs 800 crore to Rs 900 crore per year to develop 50 MW in capacity. "We can deliver 250 MW through our own capital, without raising anything from outside," said Modi.

Lodha's Palava land parcel, around 4,500 acres in size and located near Dombivali in Thane district, was long considered unviable due to poor transport and road links. However, with the upcoming Airoli-Katai Naka link that is slated to make access to Mumbai and Navi Mumbai easier, as well as planned connections with the Mumbai Metro's Orange Line and the Mumbai-Ahmedabad high-speed railway, land and home prices in the area have seen significant increases.

On the residential side, while Mumbai remains the company's major revenue and pre-sales driver, Modi noted that one-third of the pre-sales in the July-September quarter came from outside the Mumbai metropolitan region, namely Pune, Bengaluru, and National Capital Region.

The company, the top developer in Mumbai in terms of sales in the organised market, now plans to fight for market share in NCR as well, after recently ramping up its presence in Bengaluru and earlier in Pune. Lodha entered the Bengaluru market in FY22, and is now planning some land buys in NCR.

"In FY25 we had around Rs 800 crore of sales from Bengaluru. But this year, in the first half itself, we have already delivered Rs 2,000 crore in sales. And thereby we should close the year with Rs 3,000 crore... thereby the numbers start getting into the market share terms. Sales in Pune last year were Rs 2,500 crore which itself was 40% growth from the previous uh year. But now this year again we are looking Pune to deliver anywhere northward of Rs 3,500 crore. Perhaps it may touch even Rs 4,000 crore. If not this year, next year we will become the largest largest developer there," Modi said.