Sri Lotus Gets Motilal Oswal's 'Buy' Initiation, Sees 35% Upside Potential

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Motilal Oswal Report

Sri Lotus Developers and Realty Ltd. posted a 39% CAGR in pre-sales over the past three years, which is expected to accelerate to 129% over FY25-28, guided by its robust project pipeline and strong response to launches. Collections are also expected to clock 129% CAGR and reach Rs 40.2 billion by FY28.

Additionally, backed by best-in-class execution capabilities, the company is expected to achieve operating margins above 40% and net profit margins exceeding 35%.

With RoE/RoCE above 26% and a net cash status, Lotus stands out as the best proxy for MMR's redevelopment growth story.

We value the ongoing and upcoming projects based on a DCF approach, applying a WACC of 13% and terminal growth of 2%, to arrive at an net asset value of Rs 121 billion or Rs 250/share. Accordingly, we initiate coverage on the stock with a Buy rating.

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