Real estate firm Macrotech Developers has raised Rs 4,000 crore via the qualified institutional placement (QIP) route and it plans to use a majority of the sum for capital-light growth, the company said on Thursday.
“Of the Rs 4,000 crore that we have raised, we intend to use about Rs 3,000 crore for capital light growth largely through the joint development model focusing on Mumbai and Pune,” Abhishek Lodha, Managing Director and CEO at Macrotech Developers told CNBC-TV18 in an interview.
He said Mumbai and Pune are the company’s target markets and there are many areas within the two cities where the firm is under-represented currently.
According to Lodha, it’s the start of a very long upcycle in housing in India where there will be significant growth in volumes especially in mid-income and affordable housing. He sees a lot of volume growth over the next few years, which he said, is the reason for raising the capital.
“People want bigger, better homes from the top brands. As India’s largest real estate developer, we see a very exciting opportunity for growth,” he said.
The company also plans to explore an entry into Bangalore, given the tech-related boom and wealth creation happening in the city.
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With the capital raise, Macrotech Developers’ debt-equity is down to 0.75 times. “We are very comfortably placed when it comes to debt,” Lodha said.
He added that the company’s interest cost in fiscal 2023 will be down to about Rs 800-900 crore and from fiscal 2024, it will get to around Rs 500 crore.
In terms of margins, pre-COVID period, the company witnessed about 13-14 percent profit after tax (PAT) with the reduction in its cost of borrowing and the total reduction in debt.
“We are heading towards high teen PAT margins. We are able to pass on the cost inflation currently and that is quite reassuring,” he stated.
For the full interview, watch the accompanying video.
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