Lodha Developers Ltd. · NSE:LODHA
Lodha Developers — Lodha (Macrotech Developers Limited) — Investor Presentation (September 2023)
55 slides from Lodha Developers's investor presentation, September 2023
Slide 1: Corporate Presentation
Corporate PRESENTATION September 2023
Slide 2: Disclaimer
Disclaimer Certain statements in this document may be forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties like regulatory changes, local political or economic developments, technological risks, and many other factors that could cause our actual
Slide 3: Lodha: Largest Indian housing platform with robust growth opportunities
Lodha: Largest Indian housing platform with robust growth opportunities The Platform Growth Opportunities – Low investment annuity income streams Digital Infra. Property Mgmt. & Residential Rental Portfolio Platform Digital Services Growing facilities Select high quality India’s largest* Dev
Slide 4: Continued strong performance
Continued strong performance Q1FY24 pre-sales at INR 33.5bn1, building on robust FY23 Pre-sales of INR 120.6bn1 Sales Momentum Significant scale-up in new markets of MMR – Eastern Suburbs & Pune FY24 guidance at INR 145bn (+20%), backed by our supermarket strategy Micro-market focused Added
Slide 5: Industry tailwinds
O1 Industry tailwinds LODHA
Slide 6: Transition to middle income: Real Estate to grow ~2x faster than the Indian economy
Transition to middle income: Real Estate to grow ~2x faster than the Indian economy GDP Growth USD ~3tn USD ~7-8tn ~2.5x FY22 FY31 FY22-31 Doubling of Real Estate Contribution 6-7% 13-15% to GDP FY22 FY31 contribution FY22-31 ~5x Real Estate Industry Size USD 200bn USD ~1tn FY22 FY31 (20% CAGR) FY22
Slide 7: 100 mn new households to become 'home ownership capable' this decade
100 mn new households to become ‘home ownership capable’ this decade Annual 2021 2030 Per capital income seen rising HH HH GDP: USD 3tn GDP: USD 7-8tn Income Category ~2.5x over FY20-32 HH: 296mn HH: 386mn (INR mn) >2.8 High Per Capital Income (USD) 9mn 23mn (6%) (3%) 6,000 68mn 5,000 4,819 0.5-2.8
Slide 8: Strong affordability drives conversion of housing need to demand
Strong affordability drives conversion of housing need to demand Rapid urbanization to create need for quality urban housing Family nuclearization India – Urbanization (%) Urban Household size 5.6 60 50 5.2 40 4.8 30 20 4.4 10 0 4.0 1981 1991 2001 2011 2021E 2026E 1980 1990 1950 1960 1970 2000 2010
Slide 9: Robust job creation to sustain housing demand
Robust job creation to sustain housing demand …has led to robust job creation, more than offsetting Increasing presence of GCC* in India…. slowdown in hiring by IT services companies Jobs supported by GCC (in mn) 4.50 2,400 1.5x 3x 1,580 1,300 1,050 1.66 760 1.30 0.80 0.46 FY12 FY16 FY20 FY23 FY12 F
Slide 10: Supply side consolidating - unlikely to keep pace with accelerating demand
Supply side consolidating - unlikely to keep pace with accelerating demand Consolidation wave due to policy reforms and liquidity crisis… …has led to market share gains for listed developers 17% 60% >50% Incremental supply from 3x Developers count branded developers 6% Remaining Tier - 2 & 3 players
Slide 11: 'Housing' increasingly becoming a branded 'Consumer Product'
‘Housing’ increasingly becoming a branded ‘Consumer Product’ Brand matters the most Consumed over decades Highest Investment value in lifestyle purchase upgrade of life Branded home Provides Tool for aspirational wealth address creation Provides quality assurance over long period 11
Slide 12: Steady as it goes: Mortgage an enabler, not inducer of demand
Steady as it goes: Mortgage an enabler, not inducer of demand Conservative Central Bank, low risk mortgage market: LTV < 75%, no teaser rates Mortgage as % of GDP 89% Rate cycle seem to have peaked 68% pivot likely in 2HFY24 52% 44% 45% Strong performance of mortgages 39% 34% through all parts
Slide 13: Low risk to margins from construction cost inflation
Low risk to margins from construction cost inflation Construction costs typically forms 25% to 45% of the sales price o Of which, one-third is related to low skilled and semi-skilled labor: plentiful supply though migration from rural areas (250+ mn people estimated to be ‘underemployed’ in agricu
Slide 14: Construction cost – inflation moderation since Mar-22
Construction cost – inflation moderation since Mar-22 Mar’21 to Mar’22 Mar’21 to Jun’23 Commodity/Component % Share in total cost % Change Weighted Impact % Change Weighed Impact Steel 12.9% 35.1% 4.5% 5.4% 0.7% Flooring Tiles 5.0% 23.9% 1.2% 10.4% 0.5% Electrical/Plumbing 11.8% 10.1% 1.2% 4.5% 0.5%
Slide 15: Lodha's Right-to-win
O2 Lodha’s Right-to-win LODHA TEPPTEPPPPTYPL PP ErP Tree Ei
Slide 16: Lodha is India's largest residential real estate developer
Lodha is India’s largest residential real estate developer Industry dominance through consistent performance Sales – Consistently outperformed peers Deliveries FY16-FY23 Sales Performance FY16 – FY23 (msf) (INR bn) 100 624 502 468 67 58 356 45 249 205 33 10 Godrej Prestige DLF Ltd. Sobha Ltd. Oberoi
Slide 17: Strong brand enables faster churn & IRR
Strong brand enables faster churn & IRR High customer mind-share as customers look for brand Lodha in their micro-market Available across price points starting from INR 2.5mn to INR 1bn+ First to introduce amenities at scale in affordable & mid-income developments; Creates perception of luxury
Slide 18: '20:20' Action Plan
‘20:20’ Action Plan INR bn Focus to deliver ~20% Pre-sales CAGR & 20% RoE with net debt ceiling of 0.5x D/E and 1x D/OCF ~210 ~20% ~20 % CAGR ~300bps 121 ~17% FY23 FY26 FY23 FY24 Pre-Sales RoE 18
Slide 19: ~20% ROE through mix of 'owned' & 'JDA' projects
~20% ROE through mix of ‘owned’ & ‘JDA’ projects Share of pre-sales in steady PBT Margin Profile ROE Profile state Owned land projects ~60% 27-30% 15% to 20% JDA ~40% 17-19% 30%+ Overall ~20% 19
Slide 20: Significant headroom for growth in core markets of MMR & Pune
Significant headroom for growth in core markets of MMR & Pune INR bn MMR Pune Bangalore Market share by ~20% ~15% ~15% decade end ~1,500 ~500 ~600 ~10 % ~10 % ~10 % CAGR CAGR CAGR ~1,000 ~350 ~400 Market Size FY22 FY26 FY22 FY26 FY22 FY26 10+% market Likely market share share currently ~15% ~8% ~2%
Slide 21: Business Strategy
Business Strategy Micro-market focused growth strategy in MMR, Pune & Bangalore through capital light JDA model MMR: Largest developer with dominant presence in just three of the seven micro-markets; Holding market share in the three micro-markets; o Growing significantly in micro-markets with l
Slide 22: Significant opportunity to scale up in other micro-markets of MMR
Significant opportunity to scale up in other micro-markets of MMR Market leading position in most micro-markets, with potential for growth in other regions Market share by absorption in INR bn 4. Thane 1. Extended Western Suburbs Vasai Developer Market share (%) Naigaon 1 19.6% Developer Market shar
Slide 23: Accelerating growth in Pune
Accelerating growth in Pune Establishing presence across multiple locations in INR 365bn market 1. Pimpri-Chinchwad 4. Central Pre-IPO, had 1 project Pre-IPO, had no presence With annual sales potential of INR >2bn Added 1 projects with GDV of INR ~4bn Absorption: INR 85bn Absorption: INR 10bn 2. No
Slide 24: Entered Bangalore housing market
Entered Bangalore housing market Market size: INR ~400bn Micro-market Market Size (INR bn) 1 South 185 2 East 80 3 North 112 4 West 20 5 Central 3 Total 400 Signed two project with GDV of INR ~20bn and development potential of ~2.3 msf Source: Knight Frank, Industry 24
Slide 25: Exponential growth – Supermarket strategy paying good dividend
Exponential growth – Supermarket strategy paying good dividend in targeted micro-markets INR bn Pune MMR – Eastern Suburbs 11.3 12.3 >5.5x Exponential!! 5.5 2.0 1.4 0.0 FY21 FY22 FY23 FY21 FY22 FY23 MMR – Western Suburbs Townships 14 >2.2x 23 >7.6x 19 8 10 2 FY21 FY22 FY23 FY21 FY22 FY23 25
Slide 26: Township growth set for a significant leap (1/2)
Township growth set for a significant leap…(1/2) INR bn Developing two large township projects at Palava & Upper Thane with land already paid for o Generating annuity like cashflow with >50% cash margin on sales o Multiple product innovations such as Plotted Development, Crown (affordable housing)
Slide 27: …with completion of major infrastructure projects (2/2)
…with completion of major infrastructure projects (2/2) Palava Upper Thane (UT) Palava - Airoli travel time to reduce UT approachability to improve sharply UT to get closer to Dombivli station with from 40 to 20 mins with the tunnel on de-congestion by Mahamarg TDLR; travel time 8-10 mins Tunnel ent
Slide 28: Guidance for FY24
Guidance for FY24 INR bn FY23 Actuals FY24 Guidance Q1FY24 Pre-Sales 120.6 145 33.5 Seasonality impact on collections and Operating Cashflow 56.6 ~ 60 8.4 accelerated growth investments led to marginal increase in New Project Additions 198.0 175+ 120.0 debt Continued reduction, below ceiling of 1x N
Slide 29: Pro-forma P&L (basis operating performance)
Pro-forma P&L (basis operating performance) FY23 FY24E Q1FY24 Particulars INR Bn % INR Bn % INR Bn % Pre-sales 120.6 145.0 33.5 Embedded EBITDA 38.6 32% 43.5 30% 10.1 30% D&A 0.9 1.0 0.3 Finance Cost 10.0 7.5 2.0 PBT 27.7 23% 35.0 24% 7.8 23% Taxes (assumed rate: 25.2%) 7.0 8.8 2.0 PAT 20.7 17% 26.2
Slide 30: High quality management team
High quality management team Shaishav Dharia Deepak Chitnis Sushil Kumar Modi CEO – Townships, Director – GDI Chief Designer Platform Chief Financial Officer Previously served as senior architect Formerly worked with McKinsey & 26 Formerly worked at GMR, Aditya Excellent domain knowledge 23 27
Slide 31: Building annuity streams with low investments
03 Building annuity streams with low investments 31
Slide 32: Building annuity income portfolio
Building annuity income portfolio Pan-India warehousing & industrial park platform Digital Targeting 25 msf area; 5.7 msf Infrastructure under development (Jun-23) Growing facilities management business with digital services layer Have a captive base of 60,000 households with high spending p
Slide 33: Rapid digitization of Indian economy to provide immense opportunities
Rapid digitization of Indian economy to provide immense opportunities Developing Warehousing, Logistics, Data Centers, Light industrials catering to digitization of economy Opportunity to be amongst top 3 Digital Infrastructure (DI) players in India: Dedicated ~3,400 acres land for this segment
Slide 34: Recurring cashflow generation through land monetization
Recurring cashflow generation through land monetization ~340 acres land monetized since Jan-21 including: o ~110 acre in Green Digital Infra. Platform with Bain Ivanhoe Cambridge and Bain Capital o ESR Park on ~90 acres (started as a JV with MDL, monetized our stake in 2QFY23) o JV with Morgan Sta
Slide 35: Pan-India Digital Infra Platform in capital light manner
Pan-India Digital Infra Platform in capital light manner Pan-India Platform in JV with Ivanhoe Cambridge and Bain Capital with planned investment of ~USD 1 billion Shaishav Dharia o Lodha’s equity contribution largely in the form of land assets and Director – GDI Platform in-city warehouses (part
Slide 36: India's largest warehousing box ready, handed to Skechers for fit outs
India’s largest warehousing box ready, handed to Skechers for fit outs To start generating rent from H2FY24 36
Slide 37: Growing facilities management business with a digital services layer
Growing facilities management business with a digital services layer Growing facilities management business on the back of rising number households staying in Lodha developments o Captive base of 60,000 households; likely to rise to ~250,000 by 2030 o Strong understanding of consumers and their sp
Slide 38: Commercial assets with rental potential of INR ~2.6bn p.a.
Commercial assets with rental potential of INR ~2.6bn p.a. One Lodha Place iThink Palava Palava Mall Area in msf Location Worli (World Towers) Palava (Office) Xperia Mall Leasable area^ 0.73 0.58 0.42 Area Leased^ 0.2 0.15 0.39 0.43: Under development (Est. Operating Status Ready completion in 2023)
Slide 39: Growing in sustainable manner
04 Growing in sustainable manner 39
Slide 40: We are best in class when it comes to measured ESG performance
We are best in class when it comes to measured ESG performance S&P Global Corporate Sustainability GRESB Development Benchmark GRESB Standing Investments Assessment 2022 2022 Benchmark 2022 Among the top ~1% of the 867 global 5-star rating with a score of 95/100 in 4-star rating with a score of 83/1
Slide 41: Strong focus on ESG driven by our empowered Board of Directors
Strong focus on ESG driven by our empowered Board of Directors Mukund Chitale, Independent Director and Chairman Director on the Board of L&T Former President of ICAI and Chairman of Ethics Committee of BSE Rajinder Pal Singh, Non-Executive Director Director on the Board of Maruti Suzuki For
Slide 42: Our ESG Philosophy: Do Good, Do Well
Our ESG Philosophy: Do Good, Do Well Climate Resilience: Be resilient to climate change while not contributing to global warming Ensure sustainability in our core operations by positively impacting the natural environment. Not to contribute Achieve net carbon zero in Scope -1,2 in operations by the
Slide 43: Strategy to achieve the overarching ESG Goals
Strategy to achieve the overarching ESG Goals Our strategy helps us identify initiatives that enhance our impact and brings together our larger set of stakeholders to partner in the journey with us Our OurESG ESGGoals Goals Ensure sustainability in our product and E operations by positively impactin
Slide 44: Progress made in Environmental Sustainability
Progress made in Environmental Sustainability Overarching Achieve Carbon Neutrality in operations (Scope1, 2) by the year 2035 or earlier Goals Align Scope 3 emissions reduction roadmap with 1.5 ℃ ambition Be resilient to climate change while not contributing to global warming Through “Lodha Net Zer
Slide 45: Progress made in Social and Governance dimensions
Progress made in Social and Governance dimensions Governance Social Board Our People Communities Expanded Board and inducted as Diversity & Inclusion (44% Women by FY27) Enabling Livelihood for Women Independent Directors: Women represent 27%* of employee strength as Project Unnati - Develop women-o
Slide 46: Financial Highlights
05 Financial Highlights LODHA TEPPTEPPPPTYPL PP ErP Tree Ei
Slide 47: Strong execution track record
Strong execution track record Collections (INR bn) Sales (INR bn) 106 91 121 86 82 86 90 81 51 72 66 60 24 34 FY18 FY19 FY20 FY21 FY22 FY23 Q1FY24 FY18 FY19 FY20 FY21 FY22 FY23^ Q1FY24^ Summary financials (INR bn) FY19 FY20 FY21 FY22 FY23 Q1FY24 Revenue from Lower OCs during Q1 impacted 119.1 95.8 5
Slide 48: Generating significant operational cashflow for growth
Generating significant operational cashflow for growth INR bn Operating cashflow at INR 57bn Net debt and cost of debt on declining trajectory 12.3% 57 ~43% 40 161 10.5% 9.8% 9.6% 93 71 73 FY22 FY23 Mar-21 Mar-22 Mar-23 Jun-23 x% Average exit cost of debt 48
Slide 49: Business Development: Five new projects added in Q1FY24
Business Development: Five new projects added in Q1FY24 INR bn Micro-market Saleable Area (msf) Est. GDV MMR – South Central 4.3 74 MMR – South Central 1.1 16 MMR – South Central 0.4 12 MMR – Western Suburbs 0.3 10 Bengaluru - South 1.0 8 7.1 120 49
Slide 50: Good mix of inventory for sustainable growth
Good mix of inventory for sustainable growth Planned Inventory Launches Residual Pre-sales Collections Ready Ongoing In next 12 months Beyond 12 months Land Micro-markets (FY23) from Sold unsold unsold Bank# Own JDA JDA units Own Land Land Projects Projects INR bn Mn. Sq. ft. Acres South & Central 3
Slide 51: Revenue recognition for a financial year
Revenue recognition for a financial year Illustration for revenue recognition in FY26 Contracts entered before Contracts entered after Mar- Mar-23 (under PCM (100%)) 23 (under POCM (Progressive)) ‘FY26 Pre-sales’ basis cost incurred as percentage of total cost Under PCM (100%) for Sales done from un
Slide 52: Market wise completion plan for ongoing 'for sale' projects (1/2)
Market wise completion plan for ongoing ‘for sale’ projects (1/2) FY24 FY25 FY26 >= FY27 Sold/ Market Total area Unsold* Own JDA Own JDA Own JDA Own JDA Sold-PCM 0.19 - 0.15 - 0.02 - 0.11 0.07 South & Central 3.24 Sold-POCM 0.00 - 0.05 - - 0.02 0.02 0.02 Mumbai Unsold 0.17 - 0.75 - 0.46 0.45 0.08 0.
Slide 53: Market wise completion plan for ongoing 'for sale' projects (2/2)
Market wise completion plan for ongoing ‘for sale’ projects (2/2) FY24 FY25 FY26 >= FY27 Sold/ Market Total area Unsold* Own JDA Own JDA Own JDA Own JDA Sold-PCM - - - 0.18 - 0.36 - 0.18 Eastern Suburbs 2.2 Sold-POCM - - - 0.03 - 0.06 - 0.13 Unsold - - - 0.14 - 0.39 - 0.73 Sold-PCM 0.02 0.53 0.23 0.
Slide 54: Lodha - India's leading real estate developer
Lodha - India’s leading real estate developer Leading Residential Platform Strong Financial Profile Multiple Growth Drivers India’s Largest Real Estate Developer Strong operating cash flow generation giving Planned consistent growth of ~20% p.a. ability to grow & de-lever in tandem. INR ~770bn of
Slide 55: Thank You!
Thank You! For any further information, please write to investor.relations@lodhagroup.com 55
Lodha (Macrotech Developers Limited) — Investor Presentation (September 2023) on 6ix