Lodha stock up 4% as investors applaud further reduction in net debt

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Shares of recently listed real estate company Macrotech Developers Ltd, also known as Lodha Group, rose 4% on the National Stock Exchange on Thursday following its operational update for the June quarter of fiscal 2022. (T1FY22). The company recorded pre-sales of Rs957 crore in the first quarter of fiscal 22, down 62% sequentially. However, on a year-over-year basis (year-on-year), presales increased 88%. Likewise, given the impact of the pandemic, customer collections at Rs 1,714 crore in the June quarter fell 18% sequentially, but grew 346% year-on-year, helped by a favorable basis.

Analysts say the June quarter sales performance of most listed companies is expected to be subdued amid the second wave of covid. Thus, the street is likely to focus on other parameters such as balance sheet strength and market share gains resulting from consolidation.

Lodha said he reduced its consolidated net debt by 3,600 crore rupees during the quarter. In January-March its net debt decreased by Rs544 crore and in the same quarter of last year its net debt was reduced by Rs71 crore.

It should be noted that from its pre-IPO commercial debt in India of Rs 16,100 crore, the management of the company forecast a debt reduction of over Rs 10,000 crore by March 2022 and it aims to be net zero in three years. Management expects the IPO, the repayment of the promoter’s advance, and the sale of the loaned stocks to facilitate this debt reduction. Analysts at Jefferies India Pvt Ltd predict that the company’s net debt will decline by 70% and earnings will increase four times in fiscal years 21-24.

Last week, the developer said the company’s promoters had repaid Rs 1,596 crore they owed the company.

Meanwhile, the company said it has entered into joint development agreements with two new projects totaling 1.5 million square feet of salable space.

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