The Rs 2,500-crore initial public offering (IPO) of Macrotech Developers Ltd (erstwhile Lodha Developers Ltd) opened on April 7 and will close on April 9. This is the first company to launch IPO in the current financial year 2021-22.
The issue has a price band of Rs 483 – Rs 486 per share and is an entirely fresh issuance of equity shares.
This is the company's third attempt to launch an IPO after it failed to raise Rs 2,800 crore in September 2009 due to global recession and then later in 2018 because of adverse market conditions.
The company has raised Rs 740 crore from 21 anchor investors on April 6, a day ahead of the issue opening. It informed exchanges that it has allocated more than 1.52 crore equity shares to anchor investors, at Rs 486 per share, the higher end of price band.
Here's all you need to know about the issue:
Opening Date: April 7, 2020
Closing Date: April 9, 2020
Price Band: The price band for the issue has been set at Rs 483 – Rs 486 per share.
About the firm: Macrotech Developers (MDL), incorporated as Lodha Developers Pvt Ltd on September 25, 1995, is one of the largest real estate developers in India by residential sales value for FY14-20. As of December 31, 2020, it has completed approximately 77.2 million square feet of developable area across 91 projects. It has 54 ongoing and planned projects having approximately 73.8 million square feet of developable area.
Its core business is residential real estate development with a focus on affordable and mid-income housing. In 2019, the company forayed into the development of logistics and industrial parks and entered into a joint venture with ESR Mumbai 3 Pte. Ltd, a subsidiary of ESR Cayman Ltd, an Asia Pacific focused logistics real estate platform.
Size of the issue: The IPO is a fresh issuance of shares worth Rs 2,500 crore.
Reservation: The company has reserved Rs 30 crore worth equity shares for eligible employees. Up to 50 percent of the net issue will be reserved for qualified institutional buyers (QIB), 15 percent for non-institutional bidders and not less than 35 percent for retail individual bidders.
Objective: The company proposes to utilise the net proceeds from the fresh issue towards reduction of aggregate outstanding borrowings of the company amounting up to Rs 1,500 crore, acquisition of land or land developmental rights aggregating up to Rs 375 crore and for general corporate purposes.
Minimum Bid: Investors can bid for a minimum of 30 equity shares and in multiples of 30 shares thereafter. This implies a minimum investment amount of Rs 14,580 per lot at the higher price band.
Book Runners: Axis Capital, JP Morgan India, Kotak Mahindra Capital Company are the global coordinators and book-running lead managers to the issue. ICICI Securities, Edelweiss Financial Services, IIFL Securities, JM Financial, YES Securities (India), SBI Capital Markets and BOB Capital Markets are the book-running lead managers to the issue.
Financials: Lodha developers reported a loss of Rs 264.3 crore for the nine months period ended December 2020, against a profit of Rs 503 crore in the corresponding period. Revenue fell to Rs 2,915 crore, from Rs 9,272.9 crore in the same period impacted by the COVID-19 crisis. The company has a debt of Rs 18,662.18 crore as of December 2020. On Monday it said that it will reduce net debt by 24 percent to Rs 12,700 crore post its IPO.
Promoters: Its promoters are Abhishek Mangal Prabhat Lodha, Rajendra Narpatmal Lodha, Sambhavnath Infrabuild and Sambhavnath Trust. Promoters hold 39,58,78,000 equity shares in the company, representing 100 percent of the paid-up equity share capital.
Outlook: The IPO is valued at 26.3x of FY20 earnings and 4.8x of FY20 book value, which appear to be reasonably priced vis-à-vis its peers like Godrej Properties and DLF, said Reliance Securities. It is committed to substantially deleverage its balance sheet in ensuing quarters led by: (a) IPO proceeds (Rs 15 billion); (b) recovery of investment from the UK projects (~Rs 16 billion); and (c) improved collection.
"MDL’s plan to reduce net debt to Rs 127 billion in the coming quarters negates concern over high leveraging. Further, a strong project portfolio and monetization of huge land banks offer comfort. Moreover, its return ratio looks to be superior compared to peers. Hence, we recommend SUBSCRIBE to the issue,” the brokerage said in its report.