Macrotech Developers to invest Rs 3,000 crore as it eyes Bengaluru entry

Realty firm Macrotech Developers, which has projects in Mumbai and Pune regions, is looking to enter the Bengaluru market to tap huge property demand in the IT city and will invest Rs 3,000 crore equity capital for growth as it aims to increase its annual sales bookings by almost three times to Rs 20,000 crore by 2025-26, a top company official said.

The Mumbai-based company, erstwhile Lodha Developers, is one of the leading real estate firms in the country and markets its properties under 'Lodha' brand.

In an interview with PTI, Macrotech Developers Managing Director and CEO Abhishek Lodha said the company would deploy Rs 3,000 crore, out of the total Rs 4,000 crore recently being raised via sale of shares to institutional investors, for growth in the capital-light manner in Mumbai Metropolitan Region (MMR) and Pune.

"Now with our balance sheet being rock solid that it is right now, the demand is just becoming enormous. That is why we have raised fresh capital within seven months of our initial public offer (IPO)," he said.

Out of Rs 4,000 crore raised through Qualified Institutional Placement (QIP), Rs 3,000 crore will be used for growth largely in the areas MMR and Pune as there are lot of opportunities for growth. "We are aiming to have Rs 14,000 crore of sales by FY24 (2023-24 financial year) and Rs 20,000 crore by FY26 (2025-26), which is almost three times of our number before COVID," Lodha said.

Macrotech Developers had clocked a sales bookings of Rs 5,970 crore during the last fiscal year and is targeting to achieve Rs 9,000 crore in the current 2021-22.

"Growth is enormous. It is going to be more focused on middle income and affordable housing. The geographical focus is going to be around MMR and Pune where we are going to deploy funds in a capital light manner. We will not buy large parcels of land," Lodha said.

He highlighted that the company's debt equity ratio is among the lowest.

"We are growing in a capital light model where because of the company's brand and execution strength, land owners are partnering with us. We are doing joint development.

"Our core strategy is to grow in MMR and Pune. We are exploring the Bengaluru market right now because we believe that the tech revolution that is happening in the country, Bengaluru will be a big beneficiary of it," Lodha said.

He said the Rs 3,000 crore earmarked for growth would be utilised for making upfront payment in joint development agreements (JDAs) with landowners and working capital.

Lodha said the company would enter into multiple JDAs in the second half of this fiscal year with sales potential of Rs 7,000-10,000 crore.

On housing demand, he said the sales velocity has been very strong and the momentum is increasing. "The demand across the price point is very strong and supply is muted".

In April this year, Macrotech Developers got listed on the stock exchanges by raising Rs 2,500 through IPO.

Recently, Macrotech Developers reported a consolidated net profit of Rs 223.36 crore for the quarter ended September. It had posted a net loss of Rs 362.58 crore in the year-ago period.

Total income more than doubled to Rs 2,201.66 crore in the second quarter of this fiscal year from Rs 988.18 crore in the corresponding period of the previous year.

The company's debt is at around Rs 12,500 crore, which will be reduced to about Rs 10,000 crore by end of this fiscal year as per the guidance.

Out of Rs 4,000 crore raised through QIP, the company will utilised Rs 1,000 crore for debt reduction.

Macrotech Developers has delivered more than 81 million square feet of real estate and is currently developing around 93 million square feet under its ongoing and planned portfolio.

The group has more than 4,400 acres of land beyond its ongoing and planned portfolio which will be utilized in developing further residential, commercial and industrial & logistics spaces.

Besides India, Macrotech is also developing two projects in London, where it made a foray in 2013.