Motilal Oswal has given Buy recommendation for Macrotech Developers recommended buy rating on the stock with a target price of Rs 1570 in its research with a target price of Rs. 1570 in its research report issued on Apr 27, 2022
Motilal Oswal’s research report on Macrotech Developers
LODHA reported an improved performance in 4QFY22 across all metrics, with its best-ever quarterly and yearly bookings and strong collections, leading to a steady reduction (INR6b) in net debt to INR93b. As it closed FY22 on a high note, the management has set a pre-sales target of INR115b in FY23, up 27% YoY. It aims to generate INR60b of operating cash flows, which will help it reduce its net debt to sub-INR60b. We lower our FY23 pre-sales marginally (2%) to incorporate lower than estimated launches, but improve our collections and operating cash flows by 15% and 30%, respectively, on better collection efficiency. We increase our risk-free rate assumption to 7.1% from 6.5%, leading to a higher WACC. We base our net debt assumption on FY23 (from FY24) for the purpose of NAV calculation as net debt is expected to sustain at the FY23 run-rate.
As a result, our TP reduces by 8% to INR1,570 (an upside potential of 55%). We reiterate our Buy rating.