Mahindra Lifespaces - Reiterating Guidance: HDFC Securities

HDFC Securities Institutional Equities

Mahindra Lifespaces Developers Ltd. was presented in the Mahindra and Mahindra Group Analyst Day as one of the identified growth gems. It reiterated its presales guidance of Rs 80-100 billion by FY28E, the building block of which is cumulative gross development value addition of Rs 450 billion by then. The focus will be on key markets of MMR, Pune, and Bengaluru, with a GDV mix of 60:20:20.

Industrial land leasing is expected to contribute Rs 5 billion annually. To fund the growth, Mahindra Lifespace envisages Rs 70 billion investment in land, of which 50% will be funded from internal accruals and the balance from platform funding, debt, etc. Mahindra Lifespace has added Rs 44 billion of GDV during FY24 and it needs to step up the Rs 40 billion annual business development mark to Rs 6080 billion annually to deliver the FY28E target of Rs 80-100 billion presales.

Unlike peers, Mahindra Lifespace runs a tight ship with regards to 20%+ project IRR’s hurdle, shorter GDV addition to launch timeline and non-speculative BD addition and is instead building a high-quality credible franchise.

The company has a strong launch pipeline for FY25/26E and needs to accelerate the FY25E GDV addition.

We remain constructive on Mahindra Lifespace and maintain a Buy rating, with a net asset value-based target price of Rs 700/share.

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