Brokerages cut their target prices on shares of real estate giant Macrotech Developers, the operator of the 'Lodha' brand, amid a slowing macroeconomic situation and limited visibility on price growth.
Macrotech Developers reported a 66 percent growth in its consolidated net profit for the October-December quarter to Rs 944.4 crore, while the consolidated revenue grew by 39 percent over the same period to Rs 4,083 crore.
The realty firm's pre-sales bookings grew by around 32 percent year-on-year to around Rs 4,510 crore in its best ever in a quarter. Collections also increased significantly for the reported quarter to Rs 4,290 crore, higher by 66 percent year-on-year, which Lodha attributed to the "strong execution capability" of the company.
Lodha noted that demand has been robust, with consumers increasingly focusing on buying high-quality homes. Hence, the company believes that, even during a future slowdown or lean period, branded players will be in a good position.
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"While we remain constructive on demand for real estate, particularly for Grade-A developers, we have limited visibility on price growth over the long term due to increasing supply and a slowing macro. Hence, we lower target price from Rs 1,600 to Rs 1,450," said Japan-based brokerage Nomura Holdings. The broking house, however, retained its 'buy' rating.
While Lodha's new sales value shot up 32 percent YoY, the sales volumes have, however, moderated with the company increasing focus towards upper mid-income/premium segments.
"We believe management’s focus on cash flows and geographical diversification in the MMR and Pune should keep its long-term growth trajectory intact. Faster land monetisation at Palava, portfolio growth, geographical diversification and annuity asset sale can be potential stock catalyst," said Nuvama Institutional Equities. The brokerage reiterated its bullish 'buy' call, but trimmed its price target to Rs 1,703 from Rs 1,749 earlier.
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