Lodha Developers Q1 FY27 earnings call

Lodha Developers reported its best-ever quarter with revenue reaching INR 50 billion, a 43% year-on-year increase. Adjusted EBITDA surged by 79% to INR 21.5 billion, expanding the margin to 43% from 34.4% a year ago. Profit After Tax (PAT) more than doubled to INR 13.7 billion, achieving a robust PAT margin of 26.9% compared to 18.6% in Q1 FY26. This strong performance was underpinned by healthy collections of INR 42.1 billion, up 46% YoY, which translated into INR 18.9 billion of operating cash flow.

Land monetization is a planned, recurring pillar of the business. The company holds 660 acres in its green data center park, with 130 acres already monetized. A significant development was the entry of Digital Edge India into the Palava Green Data Center Park, with the transaction valued at INR 420 million per acre, effectively doubling the land value in less than 12 months. Lodha plans to monetize another 150 acres over the next 3-4 years at an average of INR 600 million per acre, projecting INR 90 billion in sales from Phase 1, which will fund the build-out of 1 gigawatt of powered shell capacity.

Pre-sales for Q1 FY27 stood at INR 46.3 billion, a 4% YoY increase, which was below the trend line due to a deliberate postponement of residential launches. This decision was influenced by the expected persistence of the Middle East conflict. However, launches have commenced in Q2, with plans for over 20 projects and phases totaling INR 250 billion in Gross Development Value (GDV) for FY27, including new entries in NCR and continued growth in Bangalore and Pune. The company expects Q2 pre-sales to be INR 50 billion or more, with H1 contributing 40-42% of the full-year guidance.

The company successfully reduced its net debt by INR 4.5 billion, bringing the total net debt to under INR 50 billion. The net debt to equity ratio now stands at a healthy 0.2x, well below the self-imposed ceiling of 0.5x. The average cost of debt remains stable at 7.8%, among the lowest in the industry. The data center build-out is largely self-funded through land sales within the park, ensuring it does not add to group leverage. The DevCo business is targeted to be effectively debt-free within the next 2-3 years.

Lodha has set an ambitious target for its broader annuity business, aiming for an exit run rate of over INR 30 billion by fiscal '32, a 10x increase from the June exit rate of INR 3 billion. This growth is expected to be driven primarily by data centers, contributing over INR 20 billion, followed by retail and offices at INR 6 billion, and warehousing and industrial at INR 4 billion. The 1 gigawatt of powered shell capacity planned for the data center park is projected to generate over INR 20 billion in annual rental income by fiscal '32.

The Palava region is poised for significant upside, particularly in residential and LandCo sales. Improved connectivity, with the Mulund-Airoli-Palava Freeway and Upper Thane connector opening after the monsoon, is expected to lead to greater accessibility. Management anticipates a meaningful impact on higher residential categories from Q4 FY27 onwards, with calendar year 2027 projected to see a significant overall impact. The LandCo segment, focused on monetizing surplus land for non-competing uses like affordable housing and back offices, is also expected to benefit from these connectivity enhancements from fiscal '28.

The company maintains a strong focus on profitability, with a long-term guidance of 20% PAT growth over the medium term^⏳, aiming beyond INR 85 billion by FY31. Return on Equity, currently 16% in FY26, is targeted to move closer to 20%. Lodha expects to enhance pricing by 5-7% across micro markets over the year, leveraging its brand strength to achieve 100-200 bps price growth. Conversion rates are also a key focus, with expectations of reaching upwards of 8% from Q2 onwards and a long-term goal of 10%.