Brokerages bullish on Macrotech Developers; Q2 update boosts stock by 4%

Macrotech Developers achieved its best ever quarterly pre-sales of Rs 42.9 billion, marking a growth of 21% on Y-o-Y despite the inauspicious 'Shradhh' period falling in Sept this FY (vs Oct in FY24).

Brokerages on Macrotech Developers: Brokerages are upbeat on real estate firm Macrotech Developers Limited (MDL) following a strong September quarter (Q2FY25) business update. 

Macrotech Developers reported record pre-sales of Rs 42.9 billion, a 21 per cent year-on-year (Y-o-Y) growth, despite challenges in the market during the 'Shradhh' period. With total pre-sales reaching approximately Rs 83 billion in H1FY25, Macrotech Developers said that it is well on track to achieve its annual growth target of 20 per cent.

Collections also rose to Rs 30.7 billion, marking an 11 per cent Y-o-Y increase. Additionally, the company expanded its portfolio by adding four projects in Pune and Bengaluru, contributing to a total business development figure of Rs 166 billion for the first half of the fiscal year.

Despite a net debt increase to Rs 49.2 billion, the company’s debt-to-equity ratio remains healthy at 0.5x. 

That said, on the bourses, Macrotech Developers share surged 4.32 per cent, hitting an intraday high of Rs 1,222.55. Analysts recommend a ‘Buy’ rating, with target prices set at Rs 1,600 from Nomura and Rs 1,795 from Nuvama (earlier Rs 1,823).

Analysts expressed confidence in Macrotech Developers’ resilience and growth potential, highlighting its effective market strategies and ongoing opportunities in digital infrastructure.

Nomura’s outlook stems from several key factors including the company’s sales strategy is granular, enabling it to fully capitalise on specific micro markets through its ‘supermarket’ approach; the township business in the extended eastern suburbs of Palava and Thane is poised for a rerating due to expected infrastructure upgrades and a premiumisation strategy that should drive price growth; and MDL’s major potential to surpass its business development targets, supported by strong operating cash flow and a relatively low level of net debt.

Analysts at Nuvama, on the other hand, noted that RERA-driven consolidation is creating growth opportunities for organised players like Lodha. With a revival in housing demand, Lodha's strong position in the Mumbai Metropolitan Region (MMR), healthy sales, solid business development, and efficient inventory management are likely to result in robust cash flows. 

They also highlighted that faster land monetisation at Palava and ongoing portfolio expansion and geographical diversification could serve as additional catalysts for stock performance.

In terms of valuation, Nomura reported that MDL shares are currently trading at 31x FY25F Ev/Ebitda, compared to a range of 20-51x for FY23 and 37-60x for FY24.

At 9:47 AM, shares of Macrotech Developers were trading 2.42 per cent at Rs 1,200.20 per share. In comparison, BSE Sensex was trading 0.31 per cent higher at 81,942.36 levels.