MC Exclusive | Aim to invest Rs 2,500 cr in FY24; focus on Mumbai, Pune & Bengaluru: Lodha Group MD

As a company we are clear that we will not invest outside India, all our growth will come from India, said Abhishek Lodha, Managing Director Lodha Group.

Realty firm Macrotech Developers, also known as the Lodha group, aims to invest around Rs 2,500 crore in the ongoing fiscal 2023-24 as growth investments of the company. It plans to launch over 11 million sq ft across 10-plus projects in focus markets like Mumbai and Pune, along with two projects in Bengaluru, the group's managing director and chief executive officer (CEO) Abhishek Lodha told Moneycontrol in an exclusive interview.

"In fiscal 2022-23, we reduced our debt by around Rs 2,200 crore, a little more than Rs 500 crore each quarter. We have not only declared a dividend of Rs 2 per share but have also issued bonus shares. We are very comfortable with our balance sheet. The company is generating significant cash flow, and even after investment for growth we will have a substantial surplus left, which we will use to continue to reduce our debt," Lodha said. The company's net debt is around Rs 7,071 crore, as of FY23.

Lodha said in the last fiscal the company had delivered around 10,000 homes, and it was confident that in the ongoing fiscal it would do the same.

Launches

On launches,  Lodha said that the company believes in diversifying across the affordable, mid and luxury segments. "This makes us more confident in the market. The diversification will be seen in our 10-plus launches in the current fiscal. Currently, we have 30 projects contributing to sales," said Lodha.

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Cities in focus

"We believe there is much headroom for growth in Mumbai, Pune, and Bengaluru. Besides these we might enter one or two new cities in the coming years, but nothing has been identified so far," Lodha mentioned.

Speaking about their two launches in Bengaluru, Lodha said, "We will launch one project in Bengaluru in the next three to four months, and another one will follow in the second half of this year. In the first project we are launching a saleable area of around 1.4 million sq ft. For the second one the saleable area has not  been finalised yet. Overall, we will be launching more than 11 million sq ft countrywide. We will have more to share about Bengaluru by the end of this year."

Bullish on demand

"We continue to be bullish on all segments of residential apartments, since we believe that all segments will grow. We do not have a benchmark of a minimum carpet area when it comes to the construction of an apartment. It all depends. Two and three BHK see the maximum demand from the regular Indian family. An ideal home for an Indian family is 3BHK, but due to budget constraints people may be opting for 2BHK apartments. One and 4BHK flats comprise a smaller percentage of sales," Lodha said.

Also read: Macrotech Developers aims to cut debt by nearly 40% in 2023 to around Rs 5,000 crore, says MD Abhishek Lodha

Redevelopment of old buildings

Asked about the company's exposure towards redevelopment of old buildings, and its plans for the future, especially in Mumbai, Lodha said, "We do not look at redevelopment as some separate segment in order to quantify our exposure. Our focus is to acquire clean land. We do not enter into redevelopment where there is a lot of dispute or difference of opinion among multiple stakeholders."

Housing boom will last 15 years

According to Lodha, considering the  overall Indian economy, there is going to be a big housing boom that will last for 15 years, with one or two bad years because of external factors.

"In these 15 years, you will see price growth, volume growth, and a lot of employment creation. As home prices go up, people who own homes will become wealthier, and as they get wealthier, they will be able to use their income for other consumption, which in turn will drive job creation and help the economy grow. Housing is going to help India  transition from a low-income to mid-income economy. Hence, the next 10 years will be the decade for housing," said Lodha.

Also read: Macrotech Developers sells properties worth Rs 12,064 crore in FY23

Plotted development

The company launched its first plotted development project in 2021 in Thane, and  another one in Dombivli.

"Plotted development is less than 5 percent of our sales currently. We do not have a specific target for scaling this up, but it will see growth. In terms of locations for plotted development, we will continue to evaluate the markets of Mumbai, Pune, and possibly Bengaluru,’’ Lodha explained.

International expansion

The company already has two residential projects in London. However, going ahead Lodha plans to focus on India and not launch any other projects internationally.

Sharing their plans about this, Lodha said, "As a company we’re clear that we will not invest outside India, all our growth will come from India. As for the two London projects, we’ve already made a profit of Rs 550 crore in the last fiscal and in the ongoing fiscal another Rs 550 crore will come. And that will be the end of the story for London,’’ he emphasised.

Sustainable construction

Lodha said the company is highly committed towards sustainable development. "We are committed to be net zero by 2035, but  will get there earlier. Making our projects more sustainable increases our capex by 2-3 percent, but it comes back as savings during the operational period because you end up consuming less."

On March 28, Macrotech Developers was trading at Rs 927.75 a share at 16.01 on the National Stock Exchange, down 1.42  percent from the previous close.