Brokerage Revises Target Price, Says Buy This Real Estate Stock For 36% Return

Top brokerage firm ICICI Direct has given a buy rating to the stock of Macrotech Developers Limited. The company achieved its best-ever July-September sales bookings in Q2FY23 worth Rs. 31.5bn (Isec estimate of Rs. 27.5bn) which was driven by a combination of monetization of ready/completed inventory and new launches.

Stock To Buy: Target Price

The Current Market Price (CMP) of Macrotech Developers (LODHA) is around Rs. 952.15. ICICI Direct has estimated a Target Price for the stock at Rs. 1304. This stock has the potential to give a 36.74% return, in the upcoming 1 year. It is a large-cap stock with a market capitalization of around Rs. 20,481 crore.

Stock Outlook
Current Market Price (CMP)	Rs. 952.15
Target Price	Rs. 1304
Potential Upside	36.74%
52-week high share price	Rs. 952.15
52-week low share price	Rs. 814.20

 

Stock Valuation

Giving a buy rating, ICICI Direct stated, "The company has given FY23 sales booking guidance of Rs. 115bn (Isec estimate of Rs. 110bn) and we believe that the sales guidance is achievable given that the company has already achieved H1FY23 sales bookings of Rs. 60.0bn (52% of FY23 guidance) in a seasonally weaker period where the April-September period typically accounts for 40-45% of annual sales. We retain our Buy rating with a revised target price of Rs. 1,304/share adjusting for lower London repatriation proceeds. Key risks are demand slowdown in MMR market and rising interest rates."

Net-Debt reduced

The company's India business net debt was reduced by Rs. 0.6bn QoQ to Rs. 88.0bn as of September, 2022, while in its London investments, the company has repaid USD225mn bonds ahead of schedule and has no further obligation on its India balance sheet. However, the company's net loss stood at Rs. 933.07 crore in Q2 FY23, as against net profit of Rs. 220.41 crore in Q2 FY23.

Fresh projects

Post listing in Q1FY22, the company has added new projects having total saleable area of 8.8msf having an estimated GDV of Rs146.0bn in FY22, majority of which are slated for FY23 launch. Considering the strong launch pipeline and sustenance in sales momentum, we estimate sales bookings of Rs. 110bn in FY23E vs. company guidance of Rs. 115bn and Rs. 119bn in FY24E. The company is targeting adding new projects having GDV of Rs. 115bn in FY23 of which it has signed 3 new JDA projects in Q1FY23, the brokerage firm mentioned.

Disclaimer

The above stock was picked from the brokerage report of ICICI Direct. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.