Macrotech Developers soars 6% on Jefferies 'buy' call, higher target

Macrotech Developers focuses on real estate development and construction, specializing in diverse projects such as residential housing complexes, commercial office spaces, and retail developments.

Shares of Lodha, listed as Macrotech Developers, soared around 6 percent on January 12 after Jefferies assigned a “buy” rating to the stock, citing a positive outlook for sales of residential projects.

Land prices have doubled in three years. However, there is potential upside in the long term, the brokerage said, as it revised the target price to Rs 1,290 from Rs 884.

According to analysts at Jefferies, the opening of the Mumbai Trans Harbour Link would boost connectivity in the city Mumbai and will be good for Macrotech Developers.

Macrotech, with its land bank of over 4,300 acre in the city outskirts, is well-positioned to benefit from the development, said Jefferies. The expected boost to residential sales from an affordable housing policy adds further optimism to Macrotech's prospects, the brokerage said.

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At 1.26 pm, Macrotech Developers shares were trading at Rs 1,180.60 on the National Stock Exchange (NSE), up 4.6 percent from the previous close.

The stock has rallied 131 percent in the past year, doubling investors' money. In comparison, the Nifty has gained 22 percent during this period.

Earlier this month, Macrotech said its pre-sales rose 12 percent on-year in December quarter to Rs 3,410 crore, its best-ever Q3 performance.

The realty firm's collections for the quarter stood at Rs 2,590 crore and added three projects with 2 million square feet of saleable area for a gross development value (GDV) of Rs 6,000 crore.

Given the macro tailwinds, Macrotech’s strong brand recall, growth and collections visibility, comfortable leverage position, likelihood of market share gains, and de-risking of business with geographic diversification, B&K Securities said it would command a premium of 110 percent to its residential net asset value (NAV).

"We believe there is a possibility for further upgrade in premium based on continuity of momentum in the housing sector. We arrive at a SOTP value of Rs 1,155 per share for Macrotech Developers. We initiate coverage on the stock with a Buy rating," the brokerage said.

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