A week after rating agency Moody's Investors Service downgraded realty player Lodha Developers (LDPL), Fitch Ratings today assigned a negative outlook to the firm due to its weak operating performance in 2014-15.
Fitch, however, has affirmed the company's long-term foreign-currency issuer default rating at 'B+' as well as 'B+' long-term rating, and recovery rating of 'RR4' on the outstanding USD 200 million senior unsecured notes due in 2020.
"The outlook revision reflects weaker-than-expected operating performance in FY15, and that a rating downgrade is likely unless Lodha's performance improves significantly over the next 12 months," Fitch said in a statement here today.
The company's annual pre-sales of Rs 7,700 crore were 4 per cent lower than in FY14 and 13 per cent below the company's target of Rs 9,000 crore.
Cash collections also fell short of expectations due to weaker demand and slower construction of some of its larger projects, the agency said.
But the positive is the pre-sales are showing an improving trend over 2014-15 as more of its large, high-end projects will close in the next 24 months, it added.
The expectations for an improvement in performance are also supported by improving macroeconomic parameters, driven by monetary easing earlier this year, which has spurred bank retail lending.
Lodha has a land bank of 25 million square metres, one of the biggest, with the land valued at over USD 10 billion by external valuers.
The company expects its current land bank to support development and sales over the next seven years.
