Macrotech Developers IPO Review – Should you Subscribe?

Macrotech Developers IPO dates, IPO Price band, market lot, reasons to invest, risk factors, IPO Price valuations and reviewMacrotech Developers [Formerly Lodha Developers] IPO Review

Mumbai based Macrotech Developers IPO (Formerly Lodha Developers) would open for subscription on 7th April, 2021. Macrotech Developers is one of the largest real estate developer in India. Many investors feel that Macrotech Developers Share price is highly priced. Should you invest in Macrotech Developers IPO? In this article we would provide Macrotech Developers IPO dates, IPO Price band, market lot, reasons to invest, risk factors, IPO Price valuations and final review whether one should invest or avoid. If you are wondering whether Macrotech Developers IPO is good or bad, you should read complete analysis. You can also read Macrotech Developers IPO review by stock market experts given at end before our view.

Also Read: 5 Midcap Multibagger Stocks with 1 year return up to 630%

About Macrotech Developers Limited

They are one of the largest real estate developers in India. Their core business is residential real estate developments with focus on affordable and mid-income housihg.

Its brands include “Lodha”, “CASA by Lodha” and “Crown – Lodha Quality Homes” for its affordable and mid-income housing projects, the “Lodha” and “Lodha Luxury” brands for its premium and luxury housing projects, and the “iThink”, “Lodha Excelus” and “Lodha Supremus” brands for its office spaces. Its inhouse sales team is supported by a distribution network of multiple channels across India as well as key Non-Resident Indian markets, such as the Gulf Cooperation Council, United Kingdom, Singapore and the United States.

Macrotech Developers competitive strengths

1) Company is one of the largest residential real estate developer in India

2) It has strong sales distribution network across India as well as NRI markets i.e. GCC, UK, Singapore, and US

3) Brand equity and premium pricing

4) Strong project execution capabilities

5) It has experienced management team

Macrotech Developers IPO Details

IPO Opening Date 07-Apr-21
IPO Closing Date 09-Apr-21
Issue Type Book Built Issue IPO
Face Value Rs 10 per equity share
IPO Price band Rs 483 to Rs 486 per equity share
Market Lot 30 Shares
Min Order Quantity 30 Shares
Listing at BSE and NSE
Issue Size Rs 2,500 Crores

Download Macrotech Developers Limited IPO DRHP

Download Macrotech Developers Limited IPO RHP

Macrotech Developers website

Objects of the issue

Here are the objects of the IPO issue.

1) Reduction of the aggregate outstanding borrowings of the company on a consolidated basis

2) Acquisition of land or land development rights

3) General corporate purposes

Who are the company promoters?

Abhishek Mangal Prabhat Lodha, Rajendra Narpatmal Lodha, Sambhavnath Infrabuild and Sambhavnath Trust are the promoters of the company.

Company Financial Performance

Here are the consolidated revenue and profit details in the last 3 years and 9 months.

For the year / Period ending Total Revenues (Rs in Millions) Profits after tax
(Rs in Millions)
Profit %
Mar-2018 137,265.6 17,893.9 13.0%
Mar-2019 119,788.6 16,439.7 13.7%
Mar-2020 125,609.8 7,448.3 5.9%
9 Months ending Dec-20 31,604.8 -2,643.0 -8.4%

Its EPS for FY2020 is Rs 18.46 and last 3 years average EPS is Rs 30.52. For 9 months ended Dec-20 company has incurred losses, hence EPS is negative.

Why to invest in this IPO?

Macrotech Developers Limited is one of the leading real estate development company in India

Risk Factors of investing in this IPO

1) Company revenues are fluctuating and on declining mode. For 9 months ended Dec-20, its revenue has fallen to almost 1/4 of FY20 revenues. Covid-19 impact is very high in real estate business. We could see that this company revenues have also fallen drastically.

2) Company has incurred losses for 9 months ended Dec-2020. Even its profits have declined during the last few years i.e. during FY18 Vs FY20.

3) Company has substantial amount of debt which could affect its ability to obain future financingor pursue its growth strategy.

4) Company had negative cash flows in the past and may continue to have in future too.

5) They have certain contingent liabilities which if materialized, may adversely affect its financial condition.

6) They have not entered into any definitive agreements to use a portion of the proceeds of the IPO issue. They may invest in a way where investors may not agree.

7) The extent to which the coronavirus disease (COVID-19) may affect its business and operations in the future is uncertain and cannot be predicted.

8) There are material outstanding legal proceedings involving company, subsidiaries, associates, Directors, Promoters and Group companies.

9) They are subject to certain risks with respect to its investments in the United Kingdom.

10) For complete internal and external risk factors, you can refer the RHP of the company

Macrotech Developers IPO Dates / Time Table / IPO Schedule

Macrotech Developers IPO opens on Wednesday, 7th April, 2021 and closes on Friday, 9th April, 2021. Macrotech IPO listing date is on 22nd April, 2021. Here is the tentative IPO schedule.

Offer Open 07-Apr-21
Offer close 09-Apr-21
Finalization of Allotment 16-Apr-21
Initiation of Refunds 19-Apr-21
Credit to Demat Account 20-Apr-21
IPO Shares Listing Date 22-Apr-21

How to apply this IPO?

You can login to your demat account, visit IPO section and click on the IPO link of Macrotech Developers Limited. You can then enter minimum lot quantity and price band and then submit.

IPO Price Valuations

Macrotech Developers IPO Issue Price band is Rs 483 to Rs 486.

1) On the upper price band of Rs 486 and EPS of Rs 18.46  for FY20, the P/E ratio works out to be 26x.

2) For the last 3 years average EPS of Rs 30.52, the P/E ratio is 16x.

3) Its 9 months ended Dec-20 EPS is negative, hence we cannot check P/E Ratio for FY21.

4) Means, the company asking price of Rs 486 of the upper price band in the P/E range of 16x to 26x excluding FY21 valuations.

5) There are listed peers like Godrej Properties which is trading at P/E 131x (Highest) and Sunteck Reality at P/E 48x (Lowest) and industry average is 42x.

If you consider FY18 to FY20 P/E, Macrotech Developers IPO Price is reasonably priced. However, considering FY21, we cannot say whether the issue price is under priced or over priced as company incurred losses.

What is the Macrotech Developers GMP Today / GMP?

There is very limited information available about Macrotech Developers Grey Market Premium (GMP). Very few commenting Rs 27 to 32, but with so much negativity, IPO investors feel this are just rumors being spread and there is no real GMP.

Macrotech Developers IPO GMP Chanakya – Nil as per their website too.

Macrotech Developers IPO GMP IPOWatch – Rs 25 to 30 as per their website.

Also Read: 5 Largecap Stocks to invest in2021

Macrotech Developers IPO Review by Stock Market Experts

Macrotech Developers IPO Review by Dilip Davda – Apply at your own risk

Macrotech Developers Review on IPO by Reliance Securities – Subscribe

Macrotech Developers IPO Review by Ventura Securities and Axis Capital – None

Macrotech Developers IPO Review – Should you invest?

Consider these pros and cons, you might be wondering whether should I buy this IPO or avoid.

Macrotech Developers Limited is the leading real estate developer in India.

Company revenues are fluctuating and on declining mode in the last 3 years and 9 months.

Company margins are on declining mode in the last 3 years and it incurred losses for 9 months ended Dec-20.

Macrotech Developers share price cannot be validated whether the issue price is under priced or over priced due to negative EPS in FY21.

Again, I would not get surprised about investors applying for such IPOs in this bull run.

I would personally like to avoid such IPOs as of now.

Readers, what do you think about this IPO? Macrotech Developers is good or bad? Are you willing to invest ?

If you like our IPO analysis, please share it with your friends through email, on Facebook or on Twitter.

Suresh KP

One comment

Leave a Reply

Your email address will not be published. Required fields are marked *