Motilal Oswal's research report on Macrotech Developers
LODHA reported an improved performance in 4QFY22 across all metrics, with its best-ever quarterly and yearly bookings and strong collections, leading to a steady reduction (INR6b) in net debt to INR93b. As it closed FY22 on a high note, the management has set a pre-sales target of INR115b in FY23, up 27% YoY. It aims to generate INR60b of operating cash flows, which will help it reduce its net debt to sub-INR60b. We lower our FY23 pre-sales marginally (2%) to incorporate lower than estimated launches, but improve our collections and operating cash flows by 15% and 30%, respectively, on better collection efficiency. We increase our risk-free rate assumption to 7.1% from 6.5%, leading to a higher WACC. We base our net debt assumption on FY23 (from FY24) for the purpose of NAV calculation as net debt is expected to sustain at the FY23 run-rate.
As a result, our TP reduces by 8% to INR1,570 (an upside potential of 55%). We reiterate our Buy rating.
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