Real Estate Stock Gets A Buy Call For An Upside Of More Than 20%

Real Estate stock gets a buy call for an upside of more than 20%

Reality firm stock received a buy call for a 22 percent potential upside from a brokerage firm, Motilal Oswal and expects low leverage of 0.5 times of equity that can assist in achieving aggressive growth. Currently, the stock is trading at Rs. 1,062.95.

Motilal Oswal has a ‘buy’ rating on the Macrotech Developers Ltd. stock with a target price of Rs. 1,295, representing a potential upside of 22 percent from the prevailing price of Wednesday at Rs. 1,062.95.

Macrotech Developers operating under the Lodha brand name reported a healthy December 2023 quarter result. The share price of the company moved up by almost 2 percent to Rs. 1,055.95 from its previous close of Rs. 1,035.4 apiece.

With a market cap of Rs. 1.02 lakh crore, shares of Macrotech Developers Ltd. opened at Rs. 1,033 in NSE on January 31. The company has delivered nearly 39.66 percent returns in the last six months, whereas it has given more than 107.4 percent in the last one year. So far, it has given positive returns of around 0.74 percent in 2024.

As per the analysts at Motilal Oswal, Macrotech Developers Ltd. has been delivering a stable performance over the last two years across their main parameters including profitability, pre-sales, cash flows, return ratios and business development.

The brokerage firm reached at the target price of Rs. 1,295 after the company sales volume increased by 4 percent in the December 2023 quarter and the collections were flat YoY at Rs. 2600 crore.

Further, the brokerage firm anticipates that the operationalisation of key infrastructure projects would significantly enhance the attractiveness of Palava city, located in Maharashtra, as a residential and warehousing destination.

Over the next few years, Macrotech is aiming to generate sales of over Rs. 8,304.15 crore, compared to its current run-rate of Rs. 3,000 crore and will continue to concentrate on its premium and luxury segment with a target to achieve the annual sales of Rs. 3,000 crore to Rs. 3,500 crore in the coming years.

The company is also planning to launch premium projects at Palava and the overall realisation improvement in the city will be higher because of the offering of premium projects, brokerage reported.

The current cash-flow run-rate of the company is adequate to achieve its

targeted growth over the medium term and the Board has passed an authorised resolution to raise equity capital up to Rs. 5,000 crore, in case of any inorganic opportunities.

Along with Motilal Oswal, Nuvama Wealth and Investment Limited, formerly known as Edelweiss Broking Limited, has a ‘buy’ rating for the Macrotech stock with a target price of Rs. 1,357 per equity share.

In terms of financials, Macrotech’s revenue from operations increased by 67.48 percent from Rs. 1,750 crore in the September 2023 quarter to Rs. 2,931 crore in the December 2023 quarter, accompanied by a 148.76 percent increase in net profit to Rs. 505 crore in the December 2023 quarter from Rs. 203 crore in the September 2023 quarter.

As of December 2023, FIIs hold 21.09 percent of the shares, whereas DIIs hold 3.21 percent of the shares in the company, aggregating to 24.3 percent of the institutional holdings.

Macrotech Developers Ltd is primarily engaged in the business of real estate development and is among the largest real estate developers in India with a presence in MMR (Mumbai Metropolitan Region) and Pune markets.

Lodha Group has been involved in the real estate business since the 1980s and has diversified into industrial and logistics park business since 2019.