Mahindra Lifespace Developers Limited (MLDL) remains on Sharekhan’s radar with a reaffirmed Buy recommendation and a revised price target of Rs. 644. The update reflects some recalibrations due to delays in new project additions and a rise in leverage. Despite weaker-than-expected sales in Q2FY2025, driven by seasonality and the absence of major launches, MLDL’s outlook remains robust with strong growth prospects in both its residential and industrial leasing segments.

Summary of Recent Performance

Weaker Residential Sales

Q2FY2025 residential pre-sales were recorded at Rs. 397 crore, marking a 13% decline y-o-y and a 61% drop q-o-q.
The slowdown was influenced by the absence of new launches and seasonal impacts, such as Pitru Paksha and heavy monsoons.
IC&IC Leasing Maintains Momentum

The company’s Integrated Cities and Industrial Clusters (IC&IC) segment performed well with Rs. 87 crore in leasing revenues for Q2FY2025, up significantly from the prior year.
Overall Revenue Dip

Consolidated revenues fell by 57% y-o-y to Rs. 7.6 crore due to lower revenue recognition.
This led to an operating loss of Rs. 47.7 crore and a net loss of Rs. 14 crore.

Positive Developments and Business Prospects

Healthy Collections and Cash Flow

Collections in Q2FY2025 grew 48% y-o-y to Rs. 459 crore.
MLDL’s free cash flows, excluding land payments, remained robust at Rs. 261 crore.
Launch Pipeline and Growth Strategy

A robust launch pipeline is planned for H2FY2025, including several high-value projects:
Vista (Kandivali) – Phase 2, estimated GDV of Rs. 1200 crore.
Crown (Pune) – Phase 2, with an estimated GDV of Rs. 800 crore.
Zen-2 (Bangalore) – Projected GDV between Rs. 250-300 crore.
Alembic (Whitefield) – Initial phase valued at Rs. 700-900 crore, total GDV Rs. 1800 crore.
Strategic Equity Platform Proposal

MLDL is exploring the setup of a Rs. 2000-3000 crore equity platform with equitable ownership.
This platform would support funding for expansion, focusing on mid-premium and premium projects.

Risks and Revised Forecast

Macroeconomic Headwinds

A weaker macroeconomic environment may impact the real estate sector broadly, with potential delays in pre-sales and project launches.
Revised Earnings Estimates

Given the current project delays, net earnings estimates have been lowered for FY2025 and FY2026 to account for slower revenue bookings.

Valuation and Investment Outlook

Revised Target Price

Sharekhan maintains a Buy recommendation on MLDL with a revised price target of Rs. 644. The price target reflects robust future growth in residential pre-sales and a positive outlook for industrial leasing activities.
MLDL continues to capitalize on its presence in growth-intensive regions like MMR, Pune, and Bengaluru. The company’s forward-looking strategy includes scaling its operations and capturing opportunities within the IC&IC segment.