Mahindra Lifespace Developers (MLDL) ended Thursday’s session 1.5 percent lower at Rs 364 levels. Over a horizon of 1 month and 6 months, the company has witnessed a fall of 2.10% and 2.8% respectively. On the contrary, if looked upon with a year of horizon, the company’s stock has observed an upside of around 26%.
Mahindra Lifespace Developers (MLDL), incorporated in the year 1999, is the real estate and infrastructure development arm of the Mahindra Group. With a presence in both residential and industrial sectors, the company is set to improve its reported revenue and earnings. Given minimal inventory and negligible debt, the company is well placed to acquire new projects to ride the up-cycle.
The company is well-placed to leverage the tailwinds the industrial real estate business faced in the past few weeks with strong additions in the land banks for residential projects. MLDL is one of the few organized players with a strong balance sheet and benefits from the attractive cost of capital which enhances its competitive position.
Recently, the real estate developer purchased 4.25 acres of land in Singasandra, South Bengaluru which is estimated to have a developable potential of approximately 4.6 lakh square feet of saleable area and a gross development value of approximately Rs 400 crore primarily comprising premium residential apartments. The company expects to launch the first phase of the project within the calendar year of 2023 itself.
Revenues and net profit margins have shown great improvement QoQ. Revenues were reported at Rs 70 crores in September 2022 to Rs 187 crores in December 2022. Net profits turned from negative to positive, i.e., losses of Rs 34 crores in Q2 to Rs 28 crores in Q3.
The company has showcased healthy returns with an upward scale YoY as well which pertains to the returns on equity of 9.49 percent and return on capital employed of 5.36 percent as of FY 21-22. The revenue figures have more than doubled from Rs 166.25 crores in FY 20-21 to Rs 393.55 crores. Net profits have taken a turnaround from net losses of Rs 71 crores to a net profit of Rs 162 crores.
Given the robust financials and business development pipeline, HDFC Securities has come up with a ‘Buy’ call on Mahindra Lifespace Developers with a target price of Rs 521 per share which represents an upside of 43% from the current levels.
Written by Amit Madnani
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