Summary of earnings call for Lodha Developers Ltd published on 01 Aug, 2025

Lodha Developers Limited
Q1 FY26
Call date · July 28, 2025

1 · Management Commentary

Key Positives

• Achieved best-ever Q1 presales at Rs. 44.5 billion, up 10% YoY; six consecutive quarters of Rs. 40+ billion sales.
• Embedded EBITDA margin at ~33%; PAT margin at ~21% on presales.
• Net debt at Rs. 50.8 billion (0.24x net debt/equity), well below 0.5x ceiling; average cost of funds down 40 bps to 8.3%.
• Added five projects in Q1 with combined GDV of Rs. 227 billion (over 90% of FY guidance), including Rs. 84 billion in Bangalore.
• Strong collections (Rs. 29 billion, up 7% YoY) and operating cash flow (Rs. 9.5 billion, up 50% YoY).
• Continued strong demand across segments, especially mid-income; non-launch weekly sales at Rs. 275–280 crore in July, higher than last year.
• Expansion in Bangalore progressing well; brand and team strength recognized by landowners.

Key Negatives

• Q1 presales moderately affected by two weeks of geopolitical tension in May 2025.
• Environmental clearance bottlenecks (NGT order) impacting launches in some regions; Supreme Court decision awaited.
• Presales growth rate (10%) lower than launch pipeline growth due to timing and external factors.

Forward Guidance

• Capex plans: Continued investments in business development and annuity income assets; debt to rise in H1 and moderate in H2.
• New products/segments: Entry into Delhi NCR within 12 months, pilot phase to launch in FY27; premiumization of Palava with new villa neighborhood (ticket size Rs. 5 crore+).
• Expected client wins/losses: Ongoing expansion in warehousing/industrial leasing; new marquee clients (e.g., Tesla, DP World).
• Revenue/margin outlook: Targeting Rs. 50 billion quarterly presales as new base; embedded EBITDA margin to remain in low-to-mid 30s, with upside from Palava mix.
• Other strategic initiatives: Launch pipeline for FY26 at Rs. 250 billion GDV; focus on premium/luxury in Bangalore and other cities; Lodha Mathematical Sciences Institute launch; continued ESG focus.

2 · Q&A Highlights

Q 1 (Composite): What is the outlook for pricing growth and cost inflation in the current market?
A (Management): - Price growth guidance maintained at 5–6% for FY26, slightly higher than last year. - Cost inflation is reasonably controlled; overall construction cost CAGR impact <3%; some input costs have declined QoQ.

Q 2 (Composite): How sustainable and predictable are land sales and the business development pipeline?
A (Management): - Land sales for data centers and industrial use are recurring and predictable; government-acquired land is one-off. - Strong pipeline for business development; over 90% of FY guidance achieved in Q1.

Q 3 (Composite): What is the sales growth outlook across regions, especially with Bangalore’s strong start and potential IT sector slowdown?
A (Management): - Sales growth is broad-based across Mumbai, Pune, Bangalore, and townships; not dependent on any single project. - Bangalore’s growth driven by premiumization, brand strength, and operational capability; IT slowdown offset by GCCs and diversified demand.

Q 4 (Composite): What is the strategy and timeline for entry into Delhi NCR?
A (Management): - Gradual entry with pilot phase; focus on building local team and supply chain. - Expect to conclude land transactions in FY26 and launch in FY27; details to follow post first land acquisition.

Q 5 (Composite): How are mid-income and premium segments performing, and what is the impact on margins?
A (Management): - Early signs of pickup in mid-income demand, with higher conversion rates in June/July as mortgage rates settle. - Margins remain stable across segments; Palava and Upper Thane offer higher cash margins due to historical land cost.

Q 6 (Composite): How are environmental clearance issues affecting launch pipeline and presales?
A (Management): - Pune unaffected; Mumbai launches worth Rs. 3,000–4,000 crore potentially impacted, pending Supreme Court decision. - Expect resolution in Q2; overall presales guidance for the year unchanged.

Q 7 (Composite): What differentiates Lodha’s product and approach in competitive markets like Bangalore?
A (Management): - Differentiation through product detailing, design, and service standards; focus on homes between Rs. 1–5 crore, especially Rs. 1–3 crore with higher psf pricing. - Large new project in North Bangalore (70 acres) to offer upmarket products; mix of outright and JDA.

Q 8 (Composite): What is the rationale for aggressive business development despite industry-wide flat volumes?
A (Management): - Top five developers are supply-constrained, not demand-constrained; value growth outpaces unit growth. - Confidence driven by brand, execution, and consumer preference for quality and low-risk developers.

3 · Other Key Numbers

• Q1 FY26 presales: Rs. 44.5 billion (up 10% YoY)
• Embedded EBITDA margin: ~33%
• Pro forma PAT: ~Rs. 9.5 billion (PAT margin ~21% on presales)
• Net debt: Rs. 50.8 billion (0.24x net debt/equity)
• Average cost of funds: 8.3% (down 40 bps QoQ)
• Collections: ~Rs. 29 billion (up 7% YoY)
• Operating cash flow: ~Rs. 9.5 billion (up 50% YoY)
• Revenue from operations: just under Rs. 35 billion (up ~23% YoY)
• Adjusted EBITDA: Rs. 12 billion (up ~25% YoY); margin 34.4% (vs. 33.7% YoY)
• Quarterly PAT: ~Rs. 6.8 billion (up 42% YoY)
• Projects launched in Q1: GDV ~Rs. 83 billion
• FY26 launch pipeline: ~Rs. 250 billion GDV
• Business development added in Q1: 5 projects, GDV ~Rs. 227 billion (incl. Rs. 84 billion in Bangalore)
• Bangalore cumulative sales (pilot phase): over Rs. 1,900 crore
• Bangalore team size: 200+ (expected to double in 12 months)
• Warehousing/industrial leasing: 0.2 mn sq ft leased in Q1; total leased area 2.3 mn sq ft
• Annuity income visibility: just under Rs. 12 billion (target Rs. 15 billion by decade end)
• Palava premium segment contribution FY25: 20% (targeting 50% by decade end)
• Palava annual sales target by decade end: Rs. 80 billion; EBITDA margin approaching 50%
• Green certified portfolio: 60+ million sq ft
• Renewable PPAs: exceeding 10 MW
• Lodha Genius program: ~300 students in 3rd batch (from 7,000 applicants)
• New villa neighborhood in Palava: ticket size Rs. 5 crore+
• Contribution from new launches to Q1 presales: ~Rs. 1,500 crore
• Non-launch weekly sales (July): Rs. 275–280 crore; target Rs. 300 crore/week by FY-end

If management references a number without disclosing it: Not disclosed

Note: This is an AI generated summary of the earnings call. There may be inaccuracies in the summary. Please refer to the original transcript before making investment decisions.