Hold Mahindra Lifespace; target of Rs 450: ICICI Direct

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26 Aug, 2025 12:21

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ICICI Direct's research report on Mahindra Lifespace

In Q2FY19, MLD recorded its best ever Q2 sales volume of 0.40 msf or 350 units (our estimate: 0.28 msf) Standalone net sales declined 5.5% YoY to | 71.6 crore (our expectation: | 107.3 crore) EBITDA margins turned positive to 1.5% due to lower project costs as a percentage of sales (58.8% in Q2FY19 vs. 70.9% in Q2FY18) PAT grew 72.7% YoY to | 22.1 crore (our expectation: | 14.1 crore) led by better margins, lower interest expenses & lower tax rate On a consolidated basis, the topline declined 19.8% YoY to | 80.2 crore while bottomline grew robustly by 188.1% YoY to | 40.3 crore In Q2FY19, Series III NCDs worth | 200 crore were redeemed along with redemption premium and interest. With this, the company has repaid entire NCDs of | 500 crore in full.

Outlook

We like MLD given its strong parentage, management’s focus on improving return ratios via strategic partnerships with IFC, HDFC Capital & comfortable balance sheet (0.01x net D/E). Also, it is currently trading at attractive valuation of 1x FY19E P/BV. However, we await significant ramp up in residential project portfolio and progress over sales pattern of industrial cluster business. Hence, we revise our recommendation to HOLD with target price of Rs 450 (0.6x its potential NAV).

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