This Mahindra Group Stock Can Surge 45%, Feels Motilal Oswal

Motilal Oswal is bullish on Mahindra Lifespaces, recommends a buy rating on the stock with a target price of Rs 550, a potential to give 45% based on its estimates in the coverage report. Mumbai-based Mahindra Lifespace Developers Ltd, part of Mahindra Group, is one of the leading real estate players in the country and has continued its strong growth progress.

Motilal Oswal's Research details on Mahindra Lifespaces.

Motilal Oswal's report states that Mahindra Lifespaces is progressing well on the growth path, "Mahindra Lifespace reported bookings of Rs 4.5 billion, up 80% YoY and 13% QoQ, driven by strong response to 1.1 meter square feet of launches. For 9MFY23, pre-sales doubled to Rs 14.5 billion and is already 40% higher than FY22 run-rate. Collections declined by 35% on a high base to Rs 3 billion, but was largely in line with 2QFY23 numbers. Construction spend stood at Rs 0.9 billion for the quarter. Consolidated net debt increased to Rs 3.7 billion from Rs 2.9billion in 2QFY23 due to increase in residential segment debt. Revenue more than doubled QoQ in 3Q to Rs 1.9 billion as the company delivered a high ticket project in Andheri, Mumbai. MLDL posted an operating loss of Rs 114 million. Excluding Rs 0.3 billion of exceptional gain related to revaluation of subsidiary, Adjusted profit after tax (PAT) came in at Rs 1 million v/s a loss of Rs 77 million in 2QFY23 and Rs 250 million profit in 3QFY22."

Outlook: Buy Mahindra Lifespaces, with a target price of Rs 550

According to the report Motilal Oswal explains why it believes the stock price will grow. "Cash flows continue to remain supportive as the company generated operating cash flow of Rs 4.5 billion in the last nine months, which were utilized to purchase land, to enhance project potential and to payout partners. Cash flows are expected to improve further from here on with further scale-up in sales. We tweak our FY23/24 revenue estimates by 36%/-15%, respectively, to incorporate updated delivery timelines for projects but profitability remains the same due to push out in completion of joint venture projects. We believe continued traction in business development will provide further growth visibility in the residential segment, which is currently not baked into the valuation and continues to remain a key catalyst for the stock. We reiterate our 'Buy' rating with an unchanged SoTP-based target price of Rs 550, indicating a 46% upside potential.

The market capiatlisation of Mahindra Lifespaces is Rs 6,130.17 crore and current market price per share is Rs 394.50, at an intraday rise of 4.56%. Its 52-week high value is at Rs 554.55 per share and its 52-week low is 252.70 per share. If you had invested in this stock a year ago, you would have earned 51.85% return by now.

Disclaimer

The stock has been picked from the brokerage report of Motilal Oswal, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.