Lodha Developers Ltd. · NSE:LODHA
Lodha Developers — Macrotech Developers Limited (Lodha) — Q4 FY2023 Earnings Presentation
65 slides from Lodha Developers's earnings presentation, Apr 22, 2023
Slide 1: Exchange filing cover letter
April 22, 2023 BSE Limited Scrip Code: 543287 Debt Segment – 974163, 974199, 974473, 974511 National Stock Exchange of India Limited Trading Symbol: LODHA Dear Sir, Sub: Investor Presentation We enclose herewith Investor’s presentation on the Audited Financial Results for the quarter and year ended
Slide 2: Investor Presentation Fourth Quarter FY2023
Investor Presentation Fourth Quarter FY2023 22nd April 2023
Slide 3: Index
INDEX Page No Highlights 4 Guidance 16 Performance Update 28 Financials 40 Company Overview 43 Annexure 51 2
Slide 4: FY23: Resilient growth, strong financial performance
FY23: Resilient growth, strong financial performance 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. in housin
Slide 5: Highlights
World Tower – Ball Room 01 Highlights 44
Slide 6: Key Performance Indicators
Key Performance Indicators FY23 Pre-sales at INR 120.6bn ( 34% YoY) vs guidance of INR 115bn Pre-sales* INR 30.3bn in Q4, third consecutive quarter of INR >30bn pre-sales Embedded 32% for FY23 EBITDA Margin# ~31% for Q4 New Projects FY23: INR ~200bn GDV (vs 150bn guidance) & ~14 msf saleab
Slide 7: FY23 - Other Operating Highlights
FY23 - Other Operating Highlights Price Growth Launches ~8% 10.3 msf FY23 price growth1 Launches across MMR and Pune Cash Flow Net Debt Operating cash flow INR 70.7bn INR 56.6bn • Reduced INR ~22.3bn Surplus for capital • Average borrowing cost provider reduced to 9.8% vs 10.5% INR 22.3bn on Mar-222
Slide 8: Q4FY23 - Other Operating Highlights
Q4FY23 - Other Operating Highlights Price Growth Launches ~8% 3.7 msf Launches across MMR FY23 price growth1 and Pune Cash Flow Net Debt Operating cash flow INR 70.7bn INR 16.0bn • Reduced INR ~9.7bn Surplus for capital • Average borrowing cost provider stable at 9.8% compared INR 9.7bn to Dec-222 1
Slide 9: FY23 - Diversified projects leading to resilient growth
FY23 - Diversified projects leading to resilient growth 33 contributing project across MMR & Pune in line with our super market strategy; 12 new projects launched during the year Improving infra and continued product innovation supporting strength in Townships o Pre-sales: INR 22.6bn in FY23 vs
Slide 10: ~9,200 new homes made ready
~9,200 new homes made ready Aquaville, Palava Bel Air, Jogeshwari Casa Maxima, Mira Road Crown Thane Key projects handed over in FY 23 9
Slide 11: UK Investments: Significant repatriation done, balance in FY24
UK Investments: Significant repatriation done, balance in FY24 Repatriated INR 5.5bn in FY23 Balance repatriation of INR ~5.5bn expected in FY24 No further investment outside India - divestment of equity in UK business once entire funds received 10
Slide 12: Rewarding shareholders
Rewarding shareholders Strong operating cash flow enables significant investment for growth + significant surplus capital for capital providers Board took note of the robust performance and decided to reward shareholders with o INR 2 per share dividend (pre-bonus)* o Bonus issue of 1:1* Policy
Slide 13: Cash Flow
Cash Flow INR bn Office & Retail Other Land & ‘For Sale’ Digital Infra 4QFY23 FY23 (for rent) Tenancy Sales Pre-Sales 29.1 0.9 - 0.3 30.3 120.6 Collections 27.8 0.9 0.2 0.4 29.3 106.1 Repatriation from UK Investments 3.0 - - - 3.0 5.5 Net* Collections including UK Repatriations 28.2 0.9 0.2 0.4 29.7
Slide 14: Building annuity income portfolio
Building annuity income portfolio Pan-India Digital Infrastructure Platform Digital Targeting 25 msf area; 5.7 msf Infrastructure under development (Mar-23) Growing facilities management business with digital services layer Have a captive base of 55,000 households with high spending power; t
Slide 15: 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 Till Mar-23* FY23 Notable Clients Shaishav Dharia Director – GDI Platform Area Under Formerly worked with McKinsey & 5.7 3.6 24+ Company and Logic Tools Development Area Under Skechers, 1.4
Slide 16: 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 Thane iThink Palava Palava Mall Area in msf Location Worli (World Towers) Thane (Clariant Plot) Palava (Office) Xperia Mall Leasable area^ 0.73 0.10 0.58 0.42 Area Leased^ 0.1 - 0.15 0.39 0.43: Under developmen
Slide 17: FY24 Guidance
The Park 02 FY24 Guidance 16 16
Slide 18: Long-term growth opportunity: Real Estate to grow ~2x faster than the Indian 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 19: 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 20: 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 21: 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 22: '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 21
Slide 23: 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 24: 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 25: …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 26: Guidance for FY24
Guidance for FY24 INR bn Moderate OCF growth on lower share of FY23 Actuals FY24 Guidance RTMI sales & strategic decision to own (not sell) high quality Pre-Sales 120.6 145 annuity assets Operating Cashflow 56.6 ~ 60 New Project Additions 198.0 175+ Continued reduction, below ceiling of 1x Net Debt:
Slide 27: Pro-forma P&L (basis operating performance)
Pro-forma P&L (basis operating performance) YoY FY23 FY24E Growth Particulars Increasing share INR Bn % INR Bn % % of JDA to stabilize margin Pre-sales 120.6 145.0 20% at ~30% Embedded EBITDA 38.6 32% 43.5 30% 13% D&A 0.9 1.0 On declining trajectory Finance Cost 10.0 7.5 PBT 27.7 23.0% 35.0 24.1% Ac
Slide 28: Strong launch pipeline for FY24 and more to be added during year
Strong launch pipeline for FY24 and more to be added during year 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 3.5 22.8 2 Eastern Suburbs JDA 1.3 21.8 4 Eastern Suburbs Own 0.3 3.
Slide 29: Performance Update
Upper Thane 03 Performance Update 28
Slide 30: Operational Performance
Operational Performance INR bn For Sale Others* 120.6 TTM pre-sales better 34.6 indicator due to 30.3 variability in timing of 90.2 (in/)auspicious period 112.3 YoY -7% 29.1 33% 31.2 84.4 3.0 msf 2.5 msf 8.0 msf 9.4 msf Pre-Sales 4Q FY22 4Q FY23 FY22 FY23 29.3 106.1 28.4 3% 86.0 23% Collections 4Q F
Slide 31: Financial Performance (1/2)
Financial Performance (1/2) Constraints of Ind-As: Revenue recognition limited to projects which are completed (OC received) in each quarter and hence, variability is high SG&A costs booked as per existing period expenses leading to increased impact on profitability in growth phase We believe,
Slide 32: Financial Performance (2/2)
Financial Performance (2/2) INR bn 34.4 32.6 92.3 94.7 -5% 3% Revenue 4QFY22 4QFY23 FY22 FY23 12.3 32.4 -20% 9.8 29.7 -8% Adj. EBITDA 36% 30% 31% 35% 4Q FY22 4Q FY23 FY22 FY23 7.5 17.7 12.6 40% 5.7 31% Adj. PAT 16% 23% 13% 18% 4Q FY22 4Q FY23 FY22 FY23* Adj. EBITDA = After Grossing up of Finance cos
Slide 33: Micro-market performance for 4QFY23
Micro-market performance for 4QFY23 INR bn Average Sales Construction Area Completed Micro-markets Pre-Sales# Collections* Price (INR psf) spends (Mn. sq. ft.) South & Central 8.6 38,841 9.3 1.9 0.2 Thane 3.6 10,039 4.3 1.9 1.4 Extended Eastern Suburbs 5.8 6,274 7.5 4.0 1.5 Western Suburbs 3.8 17,94
Slide 34: Micro-market performance for FY23
Micro-market performance for FY23 INR bn Average Sales Construction Area Completed Micro-markets Pre-Sales# Collections* Price (INR psf) spends (Mn. sq. ft.) South & Central 39.1 36,871 36.3 8.0 0.5 Thane 12.6 10,266 17.6 6.1 1.8 Extended Eastern Suburbs 22.6 6,271 22.3 13.4 5.3 Western Suburbs 13.7
Slide 35: Launches in 4QFY23
Launches in 4QFY23 Own/ JDA Est. GDV (INR Micro-market Area (Mn .Sq.ft) Est. OC Project bn) Eastern Suburbs JDA 0.7 16.1 FY27 South & Central Mumbai JDA 0.5 13.5 FY27 Western JDA 0.4 7.0 FY26 Pune JDA 0.9 6.6 FY27 Extended Eastern Suburbs Own 0.6 3.9 FY26 Thane JDA 0.4 4.5 FY27 Thane Own 0.2 2.1 FY2
Slide 36: Launches in FY23
Launches in FY23 Micro-market Own/ JDA Project Area (Mn .Sq.ft) Est. GDV (INR bn) South & Central Mumbai Own 0.9 45.5 South & Central Mumbai JDA 1.2 33.5 Eastern Suburbs JDA 1.7 31.4 Extended Eastern Suburbs Own 3.0 18.4 Pune JDA 2.0 15.1 Pune Own 0.1 1.0 Western JDA 0.5 8.6 Thane Own 0.6 6.1 Thane
Slide 37: Business Development: Twelve projects added in FY23
Business Development: Twelve projects added in FY23 INR bn Est. Launch/ Micro-market Saleable Area (msf) Est. GDV Launched MMR – Eastern Suburbs 1.7 43.0 FY23# Pune – North West 3.3 26.0 FY23# MMR - South Central 0.5 24.0 FY24 Pune – North East 2.6 20.0 FY23# MMR – Eastern Suburbs 1.5 20.0 FY24 MMR
Slide 38: Micro-market supply overview
Micro-market supply overview 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 25.3 34.5 81.5 0.3 0.5 0.9 0.8 - T
Slide 39: Market wise completion plan for ongoing 'for sale' projects
Market wise completion plan for ongoing ‘for sale’ projects Mn.sq ft. Revenue New sales from Sales from under- Sale of Sale of recognition for ready unsold construction project annuity Land the period Inventory obtaining OC during assets the period Total area FY24 FY25 FY26 >= FY27 Sold/ Business un
Slide 40: Recurring Cash-flow generation through land monetization
Recurring Cash-flow generation through land monetization INR bn Jan 21 to Mar-23 FY23 For Digital Infra use 8.8 4.6 JVs/Platform 4.6 2.6 Outright 4.2 2.0 For other uses 5.8 2.4 Total 14.6 7.1 Creates virtuous cycle for our nearby township developments due to job creation and infra building 39
Slide 41: Financials
Lodha Amara – Club House 04 Financials 40
Slide 42: Financial highlights for 4Q FY23
Financial highlights for 4Q FY23 INR bn Particulars 4QFY23 4QFY22 Growth % FY23 FY22 Growth (%) Revenue 32.6 34.4 -5.5% 94.7 92.3 2.6% Adj. EBITDA^ 9.8 12.3 -20.5% 29.7 32.4 -8.4% Adj. EBITDA (%) 30.0% 35.7% -570bps 31.4% 35.1% -370bps Adj. PAT* 7.5 5.7 31.3% 17.7 12.6 40.1% Adj. PAT (%) 22.9% 16.3%
Slide 43: Consolidated Summary Balance Sheet
Consolidated Summary Balance Sheet INR bn As at As at As at As at ASSETS EQUITY AND LIABLITIES 31-Mar-23 31-Mar-22 31-Mar-23 31-Mar-22 Equity Share Capital 4.8 4.8 Tangible Assets 13.0 13.8 Other Equity 121.8 116.2 Intangible Assets 5.3 5.4 Non-Controlling Interests 0.6 0.6 Investments 2.4 5.7 Total
Slide 44: Company Overview
Palava 05 Company Overview 43
Slide 45: 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 46: 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 47: 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 48: We are best in class when it comes to measured ESG performance
We are best in class when it comes to measured ESG performance…. Among the top ~1% of the 867 global real estate companies with a score of 75 out of 100, sharp improvement vs 2021 (top ~13% percent) Featured in the S&P Global Sustainability Yearbook Received 5-star rating with a score of 95/10
Slide 49: Environmental strategy to achieve overarching ESG goals
Strategy to achieve the overarching ESG Goals Overarching Environmental Strategy Goals Be resilient to climate change while not contributing to global warming Achieve Carbon Neutrality in operations (Scope1, 2) by 2035 or before; Align Scope 3 emissions reduction roadmap with 1.5 ℃ ambition lLodha N
Slide 50: Social strategy to achieve overarching ESG goals
Strategy to achieve the overarching ESG Goals Overarching Goals Social Strategy Create a more diverse & inclusive workforce, with a workplace gender diversity ratio of 44% by 2027^ Zero-fatality, zero hospitalisation and lowest LTIFR in the industry; Education, healthcare and livelihood for our comm
Slide 51: Governance strategy to achieve overarching ESG goals
Strategy to achieve the overarching ESG Goals Governance Strategy Overarching Strong board with diverse experiences to guide management through the business cycles Goals Meet expectation of diverse set of stakeholders through deeper engagement, transparent communication & ethical business conduct St
Slide 52: Annexure
@ RENT x ~~ ~ SSS World Towers SSS — ao
Slide 53: 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 54: 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 55: Construction cost – inflation moderation since Mar-22
Construction cost – inflation moderation since Mar-22 Mar’21 to Mar’22 Mar’21 to Mar’23 Commodity/Component % Share in total cost % Change Weighted Impact % Change Weighed Impact Steel 12.9% 35.1% 4.5% 12.7% 1.6% Flooring Tiles 5.0% 23.9% 1.2% 15.3% 0.8% Electrical/Plumbing 11.8% 10.1% 1.2% 7.3% 0.9
Slide 56: Multiple benefits of consistent 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 57: 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 58: 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 59: …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 60: 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 59
Slide 61: Strategic choice to ensure brand presence in Bangalore
…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 first project through JDA with devel
Slide 62: 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 61
Slide 63: Key premium & luxury projects delivered
Key premium & luxury projects delivered Unique ability to create destinations New Cuffe Parade Lodha Altamount World Towers Lodha Park 62
Slide 64: 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 65: Thank You!
Thank You! For any further information, please write to investor.relations@lodhagroup.com 64
Macrotech Developers Limited (Lodha) — Q4 FY2023 Earnings Presentation on 6ix