Mahindra Lifespace Developers has reached a long-awaited inflection point. After years of uneven execution and balance-sheet strain, the company has reported a decisive turnaround in Q3FY26, transitioning to operational profitability under IND AS accounting. ICICI Direct Research has reiterated its BUY recommendation on the stock, assigning a revised target price of Rs 505, implying a potential upside of 34% from the current market price of Rs 377. The investment thesis now rests on three pillars: accelerating residential pre-sales, structurally strong cash flows from the industrial clusters and integrated cities (IC&IC) business, and a rapidly improving balance sheet that enhances valuation visibility

Q3FY26 Marks a Structural Earnings Breakout

Mahindra Lifespace delivered one of its strongest quarterly performances in recent years. Consolidated revenues surged to Rs 459 crore, up 174% year-on-year and nearly 26 times quarter-on-quarter, driven primarily by revenue recognition from key residential projects such as Eden Phase I, Nestalgia Phase I, and Happinest Chennai Phase 2. This was complemented by robust leasing momentum in the IC&IC segment, which posted revenues of Rs 134 crore, reflecting a 91% YoY increase.

EBITDA for the quarter stood at Rs 30 crore, a sharp reversal from losses of Rs 25 crore in Q3FY25 and Rs 53 crore in Q2FY26. As margins from residential project completions began flowing through the income statement, adjusted PAT climbed to Rs 83 crore, compared with a net loss of Rs 23 crore a year ago. This earnings swing underscores the operating leverage embedded in Mahindra Lifespace’s model once scale and execution align.

Pre-Sales Momentum Reinforces Medium-Term Growth Visibility

Sales velocity remains a critical metric for real estate developers, and Mahindra Lifespace’s numbers are encouraging. Pre-sales during Q3FY26 stood at Rs 572 crore, representing a 71% YoY increase, although sequentially lower due to timing of launches. More importantly, new business development activity remained strong, with additions of Rs 1,010 crore in Q3FY26 and Rs 10,560 crore over 9MFY26.

The standout catalyst has been the Blossom project in Bengaluru, launched post Q3FY26. Against a total gross development value (GDV) of Rs 1,800 crore, the project has already achieved nearly Rs 1,000 crore in pre-sales, signaling strong buyer appetite. ICICI Direct expects Blossom to anchor Q4FY26 pre-sales growth, with additional support from sustenance sales across existing projects.

Residential Pipeline Scales Toward FY30 Ambitions

Management has reiterated its long-term goal of achieving Rs 9,500 crore in residential sales by FY30. This implies a compound annual growth rate of approximately 28% over FY25–FY30, supported by a cumulative GDV pipeline of roughly Rs 46,250 crore. The project mix spans seven cities and includes both ongoing inventory and future launch phases.

For FY27 specifically, Mahindra Lifespace plans to launch Rs 5,000–7,000 crore worth of projects and has guided for pre-sales of Rs 4,500–5,000 crore, translating into a robust 27–34% CAGR over FY25–FY27. The breadth of the pipeline reduces dependence on any single geography and provides resilience against localized demand fluctuations.

IC&IC Business Emerges as a Cash Flow Anchor

The industrial clusters and integrated cities segment is increasingly central to the company’s valuation narrative. Over FY23–FY25, this business generated average annual revenues exceeding Rs 500 crore, with Rs 352 crore already booked in 9MFY26. Mahindra Lifespace currently controls 1,520 acres of leasable land, nearly half of which is located in Jaipur, with the remainder spread across Chennai, Ahmedabad, and Pune.

Over the long term, management estimates that this land bank can generate Rs 5,000–6,000 crore in revenues and approximately Rs 1,500 crore in PAT (company’s share). The predictability of leasing income, combined with rising per-acre realizations, lends stability to cash flows and offsets the inherent cyclicality of residential real estate.

Balance Sheet Strengthening Accelerates

Debt metrics have improved materially, enhancing financial flexibility. Net debt-to-equity declined sharply to 0.12x in 9MFY26, compared with 0.5x in Q3FY25. Operating cash flows during 9MFY26 stood at Rs 810 crore, while the closing cash balance increased to Rs 724 crore, up from Rs 600 crore a year earlier.

This deleveraging trajectory lowers interest costs, currently estimated at 6.7%, and creates headroom for future project launches without excessive reliance on external funding. The strengthening balance sheet is a key enabler of the premium valuation multiple assigned by ICICI Direct.

Valuation: SOTP Framework Supports Rs 505 Target

ICICI Direct values Mahindra Lifespace using a sum-of-the-parts methodology. Residential projects are assessed on a project-wise NAV basis, while the IC&IC business is valued using a discounted cash flow approach. Rental assets are capitalized, and land banks are marked to current market rates.

A 15% premium to NAV has been applied, reflecting the scale of new business development expected over the next three years. This yields a total equity value of approximately Rs 10,763 crore, translating into a target price of Rs 505 per share. At this level, the stock trades at a forward P/E of around 25x FY26E earnings, which ICICI Direct considers reasonable given the projected earnings CAGR of over 80% through FY28.

Key Risks Investors Should Monitor

Despite the improving outlook, risks remain. A sharper-than-expected slowdown in the residential real estate market could dampen pre-sales momentum. Delays or challenges in monetizing the IC&IC land bank would impact long-term cash flow assumptions. Additionally, macroeconomic volatility and regulatory changes remain structural risks for the sector.

Investor Takeaway

Mahindra Lifespace Developers is transitioning from a cyclical, execution-challenged real estate player into a more balanced platform combining residential growth with annuity-style industrial cash flows. With operational profitability restored, leverage declining, and a visible multi-year pipeline in place, ICICI Direct’s BUY call and Rs 505 target appear anchored in a credible earnings recovery story. Investors with a medium-term horizon may find the current phase an attractive entry point, provided they remain cognizant of sector-wide cyclical risks