Buy This Multibagger Realty Stock For A Target Price of Rs 1,348: ICICI Securities

Macrotech Developers (LODHA) is an international real estate firm headquartered in India with a market capitalization of Rs 56,384 crore. This small cap firm has produced a multibagger return in one year, with shares rising from Rs 465 on April 19, 2021 to Rs 1,170 on April 8, 2022, 1:18 pm IST, a return of 151 percent. The stock is down -5.62 percent year to date (YTD), but it has risen 13.72 percent in the last month. ICICI Securities, which anticipates more upside in the stock, has upgraded its rating to BUY from HOLD, with a new target price of Rs1,348/share (earlier Rs1,304).

Investment rationale

The brokerage has said that "Macrotech Developers (LODHA) achieved record Q4FY22 India business sales bookings of Rs34.6bn vs. ICICI Sec estimate of Rs32.5bn (up 37% YoY and 33% QoQ) and record FY22 sales bookings of Rs90.2bn (previous highest was Rs81.2bn in FY18). We believe that the sales were largely sustenance driven with no major launches during the quarter and the company has achieved its FY22 sales guidance of Rs90.0bn. The company has added new projects having total saleable area of 8.8msf with an estimated GDV of Rs146.0bn in 9MFY22, majority of which are slated for FY23E launch."

ICICI Securities has claimed "Considering the strong launch pipeline and momentum in sustenance sales, we estimate sales bookings of Rs110.1bn in FY23E and Rs119.0bn in FY24E. Key risks are a demand slowdown in the MMR market and rising interest rates in India."

Buy for a target price of Rs 1,348

The brokerage has said in a note that "We upgrade our rating to BUY from HOLD with a revised target price of Rs1,348/share (earlier Rs1,304) incorporating new JDA projects and value the company at a 30% premium to our Mar'22E NAV of Rs1,037/share. Our GAV of Rs592bn includes Rs351bn for FY23-30E post-tax-FCFF, Rs221bn for company's land bank and Rs20bn from UK project surplus."

Disclaimer

The stock has been picked from the brokerage report of ICICI Securities. 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.