Macrotech Developers - Reiterates Strong Growth Outlook: Motilal Oswal

Motilal Oswal Report

We retain our pre-sales and P&L estimates for FY24/FY25. As Macrotech Developers Ltd. continues to work on improving its market share by focusing project addition, faster turnaround and healthy sales velocity, we expect the company to sustain its strong pre-sales growth rate for a longer period.

Given the recent run-up in real estate stocks, we continue to prefer players with an ability to sustain their pre-sales growth rate over the medium term along with healthy profitability.

We maintain our 'Buy' rating on Macrotech Developers with a revised SoTP-based target price of Rs 850 as we incorporate higher long term growth rate given the progress on asset light strategy and lower weighted average cost of capital due to lower risk free rate.

Macrotech Developers in its FY23 annual report highlighted-

1. its target of delivering a 20% compound annual growth rate in the medium term, along with 20% return on equity;

2. consistent deleveraging of the balance sheet to achieve a net debt-to-operating cash flow ratio of one time; and

3. measures being taken to build a steady stream of annuity income.

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