Indian real estate giant Lodha Developers has not had an easy path to the bourses. The company had plans to launch an IPO in 2009 but the global financial crisis and the resulting impact left it with no choice but to withdraw, and 9 years later, CEO Abhishek Lodha believes that the company has scaled up substantially as it heads for a public listing worth over Rs 5,000 crore.
Lodha developers clocked an impressive Rs 9,000 crore in revenue last year with Rs 8,100 crore in net new sales, but has been grappling with a higher number than that - its Rs 18,000 crore debt. It's no surprise that Rs 4,500 crore of the capital raised will be used to prepay some of that debt.
The IPO is an important step to consolidate a plan that the Lodha group has been focusing on over the past few years - targeting middle income and affordable housing in the MMR region.
While Abhishek claims that Lodha is known more for its super-luxury projects, The World Towers and The Park, 44 percent of the company's sales last year came from the middle income and affordable housing segment, and this number is set to grow as the company scales up its township projects in Dombivali and Thane.
The company has built up a land-bank of close to 500 million square feet, which Abhishek estimates will last 3-4 years.
The Lodha IPO is one of many primary issues that we have seen over the last three years, but it will be the first IPO of a major private real estate developer since Oberoi Realty listed on exchanges in 2010.
Considering that the real estate sector was plagued with inventory pile-ups even before the dual shocks of demonetisation and GST, industry watchers will be keenly awaiting the market's response to a new offering from a developer.
While the Lodha group will be hoping that its decade-long wait has been worth it, the real estate sector at large will be pondering a very similar question.