Mahindra Lifespace rallies 9%; hits record high on strong growth outlook

Shares of Mahindra Lifespace Developers hit a record high of Rs 555, as they rallied 9 per cent on the BSE in Tuesday’s intra-day trade on strong business growth outlook. The stock of Mahindra Group’s company engaged in real estate and infrastructure development business surpassed its previous high of Rs 550.75 touched on September 12, 2022.

Since July 25, post June quarter (Q1FY24) results, Mahindra Lifespace Developers has outperformed the market by surging 16 per cent, after the management said the company is gearing up for a 5X growth in its business over the next 5 years. In comparison, the S&P BSE Sensex was down 1.6 per cent during the same period.

The company reported residential pre-sales of Rs 345 crore and Industrial land leasing at Rs 14 crore for Q1FY24. The new CEO Amit Sinha has outlined ambitious business growth of 5x over the next 5 years from around Rs 2,268 crore of residential and IC business sales to Rs 8,000-10,000 crore by FY28.

Amit Sinha, Managing Director & CEO, Mahindra Lifespace Developers said the company has strong commitment from Mahindra Group to support this aspiration. “The company has built a strong Business Development and launch pipeline, which gives multiyear benefits. The company has also made good progress on Thane land parcel basis the new IITT policy which gives higher FS1 and favourable residential sales mix.” the management said.

The company’s industrial leasing pipeline for balance of the year is looking strong primarily driven by multiple initiatives by Central and State governments and the company expects to deliver robust performance in the coming quarters.

Mahindra Lifespace Developers has shown strong traction in sales momentum over the last two years which has sharply increased from Rs 695 crore of pre sales in FY21 to Rs 1,812 crore in FY23. Going ahead, the company is aiming to launch 8-9 projects with gross development value of Rs 3,500- 4,000 crore in FY24. Analyst at ICICI Securities expect sales value jumping to ~1.5x from FY23 levels at ~Rs 2,800 crore in FY25E, based on the launch pipelines, and new land addition.

Overall, the company has an inventory of ~1400 acres with total sales value of ~Rs 5,000 crore. The management expects to momentum to remain healthy and stable at Rs 500 crore, with strong pipeline of enquiries backed by expansion of PLI scheme, the lower tax rates for new manufacturing facilities, and the global realignment of manufacturing and supply chains favoring India.

“We like Mahindra Lifespace Developers given its strong parentage, management’s focus on expanding its overall scale of operation and a comfortable balance sheet. With strong focus on scalability, the company is poised for strong growth in medium and long term,” the brokerage firm said. It maintains ‘buy’ rating with a 12-month target price of Rs 650 per share.