Price growth in FY25 lower than expected, focusing on profitability, sales: Abhishek Lodha

Abhishek Lodha told investors that price growth in FY25 was less than the company's guidance

Real estate major Macrotech Developers saw its home prices grow by around 4 percent in FY25, lower than its guidance at the start of the previous financial year, its Managing Director Abhishek Lodha told investors in a post-earnings call, acknowledging the role of a slowing economy.

However, he expressed optimism about the housing market and the broader economy, despite uncertainty over tariffs and an uneasy geopolitical scenario.

"Per-square-foot pricing grew by approximately 4 percent for FY25 for like-to-like projects, which is somewhat lower than our guidance of 5 to 6 percent. But when seen in the context of the slowdown in the economy, we chose to make sure that we protect profitability and overall sales, rather than purely focus on a price growth objective," Lodha said.

Asked about market concerns about a sales slowdown, Lodha noted a "trifecta" of consolidation among landowners, lenders and consumers, who are preferring "Grade-A" developers to do business. He added that smaller developers are more affected when a real estate cycle takes a turn for the worse. He also observed that all large developers have delivered large-scale pre-sales growth for FY25, despite concerns over a flattening cycle.

Industry observers have expressed concerns about a perceived slowdown in home sales across key markets—particularly in the affordable and mid categories—as well as some inventory build-up in the ultra-luxury segment over the past year, due to subdued wage growth and broader economic uncertainty amid tight interest rates.

However, others have argued that the current "slowdown" is the market "cooling" after an above-normal surge in sales after the pandemic, and the cycle remains largely favourable if slightly flattening, with the Reserve Bank of India having started to ease its monetary policy.

Macrotech's plans

As part of the company's outlook, Lodha said that with the capital expenditure cycle "starting back up" after slowing in FY25, the company will stick to its medium-term strategy of delivering price growth in the range of 2 percent below wage growth.

The company's management stated that its "consumer goods" strategy —of having a presence every two to five kilometres—in key micro-markets is paying off in the form of increased pre-sales, such as in the western suburbs of Mumbai, where its FY25 pre-sales of Rs 2,500 crore were significantly higher year on year.

Macrotech's management added that it will also aim to increase the profile of annuity assets, housed under the company's digital infrastructure segment, in the form of logistics and data centre facilities. The company has also purchased land in the National Capital Region and Chennai to expand its capacity in that segment.

On April 25, Macrotech's shares closed 1.7 percent lower on the National Stock Exchange at Rs 1,298 apiece.