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Lodha Group is a residential real estate developer with focus on affordable and mid-income housing. The group commenced operations in Mumbai, developing affordable housing projects in the suburbs of Mumbai, and later diversified into other segments and regions in the MMR and Pune.
The revenues have fallen significantly by 66% as compared to the previous quarter due to the slowdown in business activity due to the pandemic.The Group posted total revenues of Rs 3160 crore for the 9 months ended 31st Dec 2020. The total revenues for FY20 increased marginally by 4.86% to Rs12560 crore from Rs 11978.87crore in FY19. However, PAT has fallen to Rs 745 crore in FY20 from Rs 1643 crore in FY19 owing to increased overall cost.
Operating margins and the net margins can be seen from the table below.It can be seen as a trend that PAT and EBITDA is showing a declining trend since the last three fiscals.
Return on net worth is (6.17%), 16.36%, 43% for 9MFY21, FY20 and FY19 respectively. Debt to equity is high at 4.58x for FY20.
| Title | 31-Dec-20 | FY20 | FY19 | FY18 |
| Total Revenue | 3160.49 | 12560.99 | 11978.87 | 13726.57 |
| Revenue from operations | 2915.01 | 12442.59 | 11906.98 | 13527.19 |
| PAT | -264.31 | 744.84 | 1643.98 | 1789.39 |
| EBITDA | 925.72 | 2038.66 | 3238.92 | 3489.04 |
| Total Assets | 40594.62 | 40692.56 | 49863.94 | 47811.28 |
| EBITDA Margin | 5.32% | 19.75% | 20.12% | 23.77% |
| Cash and Bank | 295.34 | 186.95 | 657.55 | 522.45 |
| Cash generated from operations | 1436.74 | 3773.17 | -463.18 | 695.99 |
| EBITDA Margin | 29.29% | 16.23% | 27.04% | 25.42% |
| Net Margin | -8.36% | 5.93% | 13.72% | 13.04% |
The listed peers of the Group are Brigade Enterprises, DLF Limited, Godrej Properties, Oberoi Realty, Prestige, Sobha Limited and Suntech Realty Limited. Peer related data can be seen below.
| Particulars | 31-Dec-20 | Brigade Enterprises | DLF | Godrej | Oberoi | Prestige Estates | Sobha | Sunteck Realty |
| Face Value per share | 10 | 2 | 5 | 10 | 10 | 10 | 1 | |
| Total Income for FY20 (INR Crores) | 2681.56 | 6888.14 | 2914.59 | 2285.99 | 8243.30 | 3825.66 | 631.55 | |
| EPS | 6.39 | -2.41 | 10.84 | 18.96 | 10.63 | 29.69 | 7.14 | |
| NAV per share | 119.73 | 139.24 | 190.64 | 237.33 | 139.41 | 256.33 | 199.5 | |
| Return on net worth | 4.66% | -26.62% | 5.63% | 7.99% | 9.82% | 11.59% | 3.46% | |
| P/E | 44.67 | NA | 135.51 | 31.12 | 27.44 | 15.12 | 52.14 |
The Group has a negative P/E for 9 months ended Dec 31, 2020. The industry average P/E is 42.14 and highest industry P/E is 131.10. Hence, the IPO is valued at a negative P/E. At NAV of Rs 97.03, price to book value is 5.01x at upper price band of Rs 486 per share.
The sector in the past few years has been affected by introduction of GST and RERA. It was on the path of recovery that the economy was again hit by the pandemic. Real estate continues to bear liquidity problems and even shortage of labour due to lockdown measures to pandemic.
The track record of its financial performance is not very strong. EBITDA and the PAT is showing a declining trend since the last three fiscals. It is worth to note here that this is the Issuer’s third attempt in launching the IPO! Looking at the challenges faced by the sector, weak financial performance of the Group, high debt levels and the second wave of the pandemic, it would be apt to avoid this IPO.
Review By CA Priyanka Choudhary on 30th Mar 2021
About CA Priyanka Choudhary
Priyanka Choudhary Jain is a Chartered Accountant and an experienced credit analyst. She has worked with CRISIL as Senior Credit Analyst on ratings assignments including business and financial analysis in Corporates as well as the Public Finance Sector.
Email: [email protected]
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