Motilal Oswal Sees Potential in Lodha Developers, Targets Rs 1150
Motilal Oswal Research Report Highlights Lodha Developers' Growth Potential
Lodha Developers, a leading real estate company, has reported a significant growth in its pre-sales for the fourth quarter of FY26. The company's pre-sales grew by 23% year-over-year (YoY) to INR58.9 billion, supported by sustained inventory levels and new launches of approximately 6.7 million square feet (GDV ~INR140 billion). This growth was driven primarily by a robust 58% YoY pre-sales growth in the South & Central micro-market, which contributed 39% to the overall growth.
For the full year FY26, Lodha Developers' pre-sales grew 16% YoY to INR205 billion, marginally missing the initial guidance due to slower NRI sales in the luxury segment. Despite this, the company's growth prospects look promising, with a launch pipeline of approximately 15 million square feet (GDV ~INR218 billion) and INR514 billion in unsold inventory, which is expected to last for around 30 months. Furthermore, the company has a future pipeline of 72 million square feet beyond FY27, which can sustain its growth momentum in the medium term.
Key Drivers of Growth
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| Region | FY26 Pre-Sales Growth | Contribution to Total Growth |
|---|---|---|
| South & Central | 58% YoY | 39% |
| Other regions | 61% |
Based on the assumption that the Middle East situation normalizes by 1QFY27-end, Lodha Developers has guided for 17% YoY pre-sales growth in FY27. The company's growth prospects are expected to improve further, driven by the launch of the NCR project in 4QFY27/1QFY28, which is expected to contribute to improving regional diversification.
Valuation and Recommendation
Lodha Developers is currently trading at a 29% discount to its residential segment Net Asset Value (NAV). The company's development business is valued at its NAV, while the annuity business is valued at a 7.5% cap rate. Motilal Oswal has a BUY recommendation for the company with a target price of INR1,150.
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Investor Takeaway
Investors should expect a 16% CAGR in pre-sales to INR275b during FY26-28E.
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