ICICI Direct recommended hold rating on Mahindra Lifespace with a target price of Rs 430 in its research report dated January 30, 2019.
ICICI Direct's research report on Mahindra Lifespace
Mahindra Lifespace Developers (MLD) recorded better sales volume growth at 12% YoY to 0.35 msf valued at Rs 215 crore Standalone net sales declined 16.1% YoY to Rs 121.4 crore but was better than our expectation of Rs 79.2 crore EBITDA margins contracted 405 bps YoY to 7.1%, lower than our estimate of 11.4% due to higher employee costs PAT grew 16.8% YoY to Rs 15.4 crore (better than our expectation of Rs 14.7 crore) largely led by higher-than-expected topline growth On a consolidated basis, the topline declined 26.0% YoY to Rs 137.4 crore while its bottomline de-grew 28.4% YoY to Rs 19.4 crore.
We like MLD given its strong parentage, management’s focus on improving return ratios through strategic partnerships with IFC & HDFC Capital & comfortable balance sheet. Additionally, it is currently trading at attractive valuation of 0.9x FY20E P/BV. While there are hints on a ramp up in residential project portfolio, we would like to see more improvement & also track progress in industrial cluster business. Hence, we maintain our HOLD rating with a target price of Rs 430/share.
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