Lodha Developers Ltd. · NSE:LODHA
Lodha Developers — Macrotech Developers Limited (Lodha) — Q1 FY2024 Earnings Presentation
61 slides from Lodha Developers's earnings presentation, Jul 27, 2023
Slide 1: Cover letter to stock exchanges
July 27, 2023 BSE Limited Scrip Code: 543287 Debt Segment – 974163, 974199, 974473, 974511, 974986 National Stock Exchange of India Limited Trading Symbol: LODHA Dear Sir, Sub: Investor Presentation We enclose herewith Investor’s presentation on the Unaudited Financial Results for the quarter ended
Slide 2: Investor Presentation First Quarter FY2024
Investor Presentation First Quarter FY2024 27 July 2023
Slide 3: Index
INDEX Page No Highlights 4 Growth Drivers 12 Performance Update 23 Financials 36 Company Overview 39 Annexures 46 2
Slide 4: 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 5: Highlights
World Tower – Ball Room 01 Highlights 44
Slide 6: Key Performance Indicators
Key Performance Indicators Pre-sales* INR 33.5bn ( 17% YoY), best ever Q1 Embedded ~30% EBITDA Margin# 5 projects with INR ~120bn GDV (vs 175+ bn full-year guidance) New Projects o Expanding our offering at super prime location in Alibaug, a market Added starved of Tier 1 brand o Added 2nd pro
Slide 7: Q1FY24 - Other Operating Highlights
Q1FY24 - Other Operating Highlights Price Growth Launches ~1% 1.8 msf Launches across MMR Q1FY24 price growth1 and Pune Cash Flow Net Debt INR 72.6bn Operating cash flow • Average borrowing cost INR 8.4bn decrease by ~15bps to 9.65% compared to Mar- 232 1YTD i.e. Sales price in Q4FY23, basis weighte
Slide 8: Diversified projects leading to resilient growth
Diversified projects leading to resilient growth 30+ contributing project across MMR & Pune in line with our super market strategy Continued growth in townships supported by Improving infra and continued product innovation o Pre-sales: INR 6.1bn in Q1FY24; INR 22.6bn in FY23 New micro-markets
Slide 9: Cash Flow
Cash Flow INR bn Office & Retail Other Land & ‘For Sale’ Digital Infra Total (for rent) Tenancy Sales Pre-Sales 32.1 0.8 0.2 0.5 33.5 Collections 22.5 0.7 0.4 0.5 24.0 Net Collections* 19.7 0.7 0.4 0.5 21.2 Op. Expenses 12.8 0.1 - - 12.9 - Const. Exp 9.9 0.1 - - 10.0 - SG&A 3.5 - - - 3.5 - Taxes - -
Slide 10: 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 11: Green Digital Infra.: potential to generate significant annuity income
Green Digital Infra.: potential to generate significant annuity income KPIs (all nos in mn Sq ft.) Period Area (msf) Notable Clients Shaishav Dharia Director – GDI Platform Area Under Formerly worked with McKinsey & 5.7 24+ Company and Logic Tools Development Area Under Construction 1.4 Skechers
Slide 12: Commercial & retail assets with rent potential of INR ~2.6 bn p.a.
Commercial & retail assets with rent potential of INR ~2.6 bn 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
Slide 13: Growth Drivers
Palava 02 Growth Drivers 1212
Slide 14: Long-term growth opportunity: Real Estate to grow ~2x faster than economy
Long-term growth opportunity: 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) FY2
Slide 15: 100 mn new households to become 'home ownership capable'
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 16: 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 2030 1950 1960 1970 1980 1990 2000
Slide 17: Other industry tailwinds
Other industry tailwinds Consolidating supply unlikely to keep pace with accelerating demand, creating lot of opportunities for Tier-1 developers o On the demand side, housing sales in top 7 cities to reach ~1mn units by CY30 from ~360k in CY22 o Consolidation wave due to policy reforms, liquidity
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 17
Slide 19: 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 20-33% market Likely market share share in micro- ~15% market
Slide 20: 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 21: 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 22: Guidance for FY24
Guidance for FY24 INR bn FY23 Actuals FY24 Guidance Q1FY24 Pre-Sales 120.7 145 33.5 Seasonality impact on collections and Operating Cashflow 56.6 ~ 60 8.4 accelerated growth investments led to marginal increase in debt New Project Additions 198.0 175+ 120.0 Continued reduction, below ceiling of 1x N
Slide 23: Strong launch pipeline for rest of FY24
Strong launch pipeline for rest of FY24 Own/ JDA Est. GDV (INR Micro-market Area (Mn .Sq.ft) No of Projects Project bn) South Central JDA 0.5 21.7 1 South Central Own 0.3 13.5 1 Extended Eastern Suburbs Own 2.6 17.1 2 Eastern Suburbs JDA 1.4 22.2 4 Eastern Suburbs Own 0.3 3.8 1 Western Suburbs JDA 0
Slide 24: Performance Update
Upper Thane 03 Performance Update 23
Slide 25: Operational Performance
Operational Performance INR bn For Sale Others* 120.6 33.5 90.2 28.6 112.3 32.1 33% 30% 84.4 24.7 2.2 msf 2.8 msf 8.0 msf 9.4 msf Pre-Sales Q1FY23 Q1FY24 FY22 FY23 26.2 24.0 106.1 -8% 86.0 23% Collections Q1FY23 Q1FY24 FY22 FY23 1.2 9.3 msf -42% 5.9 58% 0.7 Completions Q1FY23 Q1FY24 FY22 FY23 *Other
Slide 26: 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 27: Financial Performance (1/2)
Financial Performance (1/2) INR bn 92.3 94.7 26.8 3% -40% 16.2 Revenue Q1FY23 Q1FY24 FY22 FY23 32.4 29.7 9.0 -9% -49% 4.6 Adj. EBITDA 34% 29% 31% 35% Q1FY23 Q1FY24 FY22 FY23 17.7 3.6 12.6 40% -52% 1.7 Adj. PAT 13% 10% 13% 18% Q1FY23 Q1FY24 FY22 FY23* Adj. EBITDA = After Grossing up of Finance cost i
Slide 28: Financial Performance (2/2)
Financial Performance (2/2) Revenue recognition under PCM (100%) linked to receipt of Occupation Certificate (project completion) whereas underlying profitability of business is linked to sales and construction progress basis which cash flow comes in. Due to PCM (100%) methodology followed for c
Slide 29: Micro-market performance for Q1FY24
Micro-market performance for Q1FY24 INR bn Average Sales Construction Area Completed Micro-markets Pre-Sales# Collections* Price (INR psf) spends (Mn. sq. ft.) South & Central 11.6 33,330 8.3 2.2 - Thane 3.0 10,412 3.6 1.7 - Extended Eastern Suburbs 6.1 6,360 5.1 3.7 0.7 Western Suburbs 2.7 16,014 2
Slide 30: Launches in Q1FY24
Launches in Q1FY24 Micro-market Own/ JDA Project Area (Mn .Sq.ft) Est. GDV (INR bn) Pune JDA 1.1 8.2 Western Suburbs JDA 0.3 4.1 Extended Eastern Suburbs Own 0.4 2.8 Total – Q1FY24 1.8 15.1 29
Slide 31: 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 30
Slide 32: Recurring Cash-flow generation through land monetization
Recurring Cash-flow generation through land monetization INR bn Collections Jan-21 to Jun-23 Q1FY24 For Digital Infra use 9.2 0.4 JVs/Platform 4.6 - Outright 4.6 0.4 For other uses 6.3 0.5 Total 15.5 0.9 Creates virtuous cycle for our nearby township developments due to job creation and infra buildi
Slide 33: Lodha: Micro-market wise supply
Lodha: Micro-market wise supply Planned Inventory Launches Residual Collections Ready Ongoing In next 12 months^ Beyond 12 months Land Micro-markets from Sold unsold unsold Bank JDA JDA units Own Land Own Land Projects Projects INR bn Mn. Sq. ft. Acres South & Central 30.9 28.8 74.4 0.3 1.0 0.9 6.1
Slide 34: 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 35: Market wise completion plan for ongoing 'for sale' projects (1/2)
Market wise completion plan for ongoing ‘for sale’ projects (1/2) Mn.sq ft. 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.
Slide 36: Market wise completion plan for ongoing 'for sale' projects (2/2)
Market wise completion plan for ongoing ‘for sale’ projects (2/2) Mn.sq ft. 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.
Slide 37: Financials
Lodha Amara – Club House 03 Financials 36
Slide 38: Financial highlights for Q1FY24
Financial highlights for Q1FY24 INR bn Particulars Q1FY24 Q1FY23 Growth % FY23 Revenue 16.2 26.8 (39.6)% 94.7 Adj. EBITDA^ 4.6 9.0 (48.6)% 29.7 Adj. EBITDA (%) 28.7% 33.7% (500)Bps 31.4% Adj. PAT* 1.7 3.6 (52.3)% 17.7 Adj. PAT (%) 10.2% 12.9% (270)bps 18.2% Networth 129.2 Net D/E (x) 0.56x ^Adjusted
Slide 39: Consolidated Summary Balance Sheet
Consolidated Summary Balance Sheet INR bn As at As t As at As at ASSETS EQUITY AND LIABLITIES 30-Jun-23 31-Mar-23 30-Jun-23 31-Mar-23 Equity Share Capital 9.6 4.8 Tangible Assets 13.1 13.0 Other Equity 118.9 121.8 Intangible Assets 5.3 5.3 Non-Controlling Interests 0.6 0.6 Investments 5.5 2.4 Total
Slide 40: Company Overview
The Park 05 Company Overview 39 39
Slide 41: Investing for the next phase of growth
Investing for the next phase of growth Three focus areas- Technology, People and ESG Technology Undergoing a Tech. Transformation to achieve operational improvement, revenue growth, superior customer & employee experience Standardized design and debottleneck processes Roadmap to ensure high va
Slide 42: Eminent Board of Directors
Eminent 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 Former Chairman and Managing Director o
Slide 43: Strong management team
Strong 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 & Formerly worked at GMR, Aditya Excellent domain knowledge 24+ 27+ at Obe
Slide 44: Our Sustainability Strategy: Do Good, Do Well
Our Sustainability Strategy: Do Good, Do Well 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 45: Best-in-class 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 46: Our commitment to sustainability: Progress across key focus areas
Our commitment to sustainability: Progress across key focus areas Environment • Green Certification received for ~28.8 million sqft across projects; process ongoing for ~47.5 million sqft across 25 residential projects • 98% of renewable energy share in our total energy consumption, across construct
Slide 47: Annexure
@ RENT x ~~ ~ SSS World Towers SSS — ao
Slide 48: 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 (%) Developer Market share (%) Naigaon 1
Slide 49: Pune - fourth largest housing market of India
Pune - fourth largest housing market of India… Accelerating growth in INR 365bn market by establishing presence across multiple locations 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 Absor
Slide 50: Will contribute to growth in a sustainable manner
…will contribute to growth in a sustainable manner Large & resilient market with a play on IT and manufacturing sector upswing Historically, we have only present through Lodha Belmondo in Pune (Pimpri-Chinchwad) Signed four projects at NIBM, Hinjewadi, Bund Garden & Kharadi; advanced stage of
Slide 51: Entered Bangalore housing market
Entered Bangalore housing market… Market size: INR ~400bn Micro-market Market Size (INR bn) 1 South 185.0 2 East 80.0 3 North 112.0 4 West 20.0 5 Central 3.0 Total 400.0 Source: Knight Frank, Industry 50
Slide 52: Strategic choice to ensure brand presence in market
…strategic choice to ensure brand presence in market with good long-term prospects Key reasons for entering the market o Fragmented market with Top 5 players accounting for ~30% market share o Market with steady sales o Core hub for Technology in India Signed two projects through JDA with develo
Slide 53: Supply side consolidating - unlikely to keep pace with 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 54: 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 < 85%, 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 part
Slide 55: 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 56: 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 57: Multiple benefits of housing price increase below wage growth
Multiple benefits of consistent housing price increase below wage growth Improves affordability leading to increased volumes Leads to significant wealth creation for home owning middle class (‘Wealth Effect’) o Boosts consumption as consumer confidence increases o Housing is a vehicle for genera
Slide 58: Key affordable & mid-income projects delivered
Key affordable & mid-income projects delivered Unique ability to create destinations Lodha Upper Thane Lodha Belmondo Lodha Splendora Lodha Amara Lodha Palava 57
Slide 59: Key premium & luxury projects delivered
Key premium & luxury projects delivered Unique ability to create destinations New Cuffe Parade Lodha Altamount World Towers Lodha Park 58
Slide 60: 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 61: Thank You!
Thank You! For any further information, please write to investor.relations@lodhagroup.com 60
Macrotech Developers Limited (Lodha) — Q1 FY2024 Earnings Presentation on 6ix