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Real Estate Magnates

All You Need to Know About Lodha Group’s IPO Listing: What’s Next?

The Lodha Group has become synonymous with the Indian real estate market. The company boldly markets itself as India’s no.1 real estate developer and has proven it year over year since 2014. 

The company was founded by Mangal Prabhat Lodha in 1980 when he shifted from Jodhpur to Mumbai. Lodha Group has dominated the market since 2014 by pivoting its business model to residential real estate developments with a focus on affordable and mid-income housing. 

The company has sub-branded for various strata of the market.

Affordable and mid-income housing

  • Lodha
  • CASA by Lodha
  • Crown – Lodha Quality Homes

Premium and luxury housing

  • Lodha
  • Lodha Luxury

Office spaces

  • iThink
  • Lodha Excelus
  • Lodha Supremus

Here’s All You Need to Know About the Company & Its IPO

  1. The company mainly targets cities like Mumbai, Pune and London. Lodha Group affordable and mid-income housing developments accounted for Sales of INR 1817 and INR 3055 crores, respectively, during the financial year 2020. 
  1. Macrotech Developers (erstwhile Lodha Developers) launched an INR 2500 crores initial public offering on 7th April 2021. It should be noted that this is not the first time they are attempting to launch an IPO.
  1. They 1st rolled out an INR 2800 crores IPO in 2009. This plan didn’t come to fruition because of the great recession of 2008, which began in the USA due to faulty mortgage packages, which ended up hitting every market and plummeting the economy. Their second attempt was in 2018. The reason for failure was the adverse effects of GST, demonetization and introduction of RERA to the real estate industry. 
  1. IPOs are always sold in lots, and in this case, they packaged 30 shares in one lot costing INR 14580, which put the price band of the IPO at INR 483 to 486 per equity share. The fundamental purpose of the IPO was one of the main reasons why the sentiments were low from the beginning. The company hoped to reduce aggregate outstanding borrowings of the company on a consolidated basis.
  1. The IPO was subscribed only 1.36 times by the closing date, 9th April 2021. To put things in perspective, Burger King issued an IPO in December 2020, and it was subscribed 156.65 times by closing date across all categories.
  1. These speculations of underperformance were proven right on 19th April 2021. The IPO listed at a 9.67% loss, issued at INR 486 per share to the listing of INR 439 on BSE. On the day of listing, the stock’s lowest performance was at INR 422.60 and highest performance at INR 478. 

For the Lodha Group, FY21 is the only asterisk in their financials, counting from 2014. Due to pandemic chaos, the company has incurred tremendous losses and racked up a substantial debt, which dropped their net profit to INR -264 crores. Their net profit in FY19 and FY20 was INR 1644 and INR 745 crores, respectively. 

So should you keep or buy the shares of the company?

Because of their stellar record and global shock of the pandemic, we can give Lodha Group the benefit of the doubt. Investors can keep this stock as a long term investment speculating a tremendous bounce-back due to the normalization of the pandemic and settlement of their debts. 

Secondly, real estate has hit its rock-bottom, the only way it can go from here is up — supported by high affordability, low-interest rates and interesting schemes laid out by the government!

What are your thoughts? Share in the comments section!

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