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Buy Mahindra Lifespace; target of Rs 520: ICICI Direct

ICICI Direct recommended buy rating on Mahindra Lifespace with a target price of Rs 520 in its research report dated August 02, 2017.

August 04, 2017 / 05:36 PM IST
 
 
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ICICI Direct's research report on Mahindra Lifespace


Mahindra Lifespace Developers’ (MLD) standalone net sales grew robustly by 22.9% YoY to Rs 109.3 crore The EBITDA margin contracted 334 bps YoY to 10.6% mainly on account of a change in the project mix Standalone PAT de-grew 30.3% YoY to Rs 10.7 crore due to lower other income (Rs 14.5 crore in Q1FY18 vs. Rs 18.0 crore in Q1FY17) On a consolidated basis, topline grew 40.9% YoY to Rs 136.1 crore. However, its bottomline declined 20.8% YoY to Rs 13.8 crore.


Outlook


We like MLD given its strong parentage, management’s focus on improving efficiency & return ratios through strategic partnerships, MLD’s affordable housing foray & comfortable balance sheet (0.2x debt to equity). With an anticipated pick-up in leasing activity at industrial clusters on back of economic revival and various high margin projects to hit revenue recognition, we expect its bottomline to grow at 25.6% CAGR to Rs 161.2 crore while sales volume are expected to grow at 44.3% CAGR in FY17-19E to 2.0 msf. We also factor in dilution by rights issue. We have BUY rating on MLD with target price of Rs 520 (0.8x its potential NAV).


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first published: Aug 4, 2017 05:36 pm

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