New rules for Insurance Sector, a positive or a negative move?
The Indian Government, in its FY22 Union Budget, has made two major announcements, (1) increased the permissible FDI limit from 49% to 74% in insurance companies and allowed foreign ownership and control with safeguards, (2) allowing tax exemption for maturity proceeds of ULIP policies having aggregate premiums of only up to Rs250k per annum (vs. no limit earlier). While increase in FDI limit is positive for the sector, it will increase competitive intensity for the larger and well-capitalized players where FDI was anyways significantly below 49%. On ULIPs taxation, it removes the tax arbitrage benefit that ULIPs used to enjoy vs. mutual funds, thereby reducing its relative attractiveness as a savings vehicle, though certain low cost ULIPs launched by bigger players remain more efficient than Mutual funds for investors.
Increase in FDI limits:
The Government has proposed to increase the permissible FDI limit from 49% to 74% in insurance companies and allow foreign ownership and control with safeguards. Under the new structure, the majority of Directors on the Board and key management persons would be resident Indians, with at least 50% of Directors being Independent Directors, and specified percentage of profits being retained as general reserve. This initiative is likely to provide much required capital to some of the smaller players in the industry as well as an exit to some of the existing JV partners. Given that most of the listed players are well capitalized and have seen their foreign JV partners exiting their holdings, except in case of IPRU, we do not see them as beneficiaries of these FDI changes. On the contrary, it could raise competitive intensity in the sector, especially in the non-life segment where companies may resort to aggressive pricing if equipped with easy capital. Hence, we view this as a marginally negative development for the listed insurance players but positive for the overall sector.
Taxation of proceeds from high premium ULIPs:
Under Section 10(10D) of the Income Tax Act, proceeds from life insurance policies are tax free if the sum assured is at least 10X of the annual premiums. As per the government, this has resulted in instances of investing in ULIPs with huge premiums to claim the exemption which defeats the legislative intent of this clause, to provide benefit to small and genuine cases of life insurance. Hence, it has been proposed that (1) the tax exemption shall not apply with respect to any ULIP issued on or after February 1, 2021, if the amount of premium payable for any of the years during the term of the policy exceeds Rs.250k, and, (2) if premium is payable by a person for more than one ULIPs, issued on or after Feb 1, 2021, tax exemption shall be available only with respect to such policies where aggregate premium does not exceed Rs250k. However, any sum received on the death of a person will remain exempt. The tax rate applicable on the non-exempt policies will be similar to the concessional capital gains taxation regime as available to the mutual funds (@10% + surcharge/cess).
S&P BSE Sensex was up only 1% (February 01, 2021- February 26, 2021) post Union Budget FY22 announcement, Here, we have discussed some insurance companies’ stocks that have given positive returns or have underperformed the benchmark index S&P BSE Sensex in the same period.
|ICICI Pru Life||490.25||461.3||-5.90%|
The stocks in the insurance sector have underperformed the BSE benchmark in the past 1 month. ICICI Pru Life tanked 5.9% from February 01, 2021- February 26, 2021. Similarly, SBI Life fell 2.3% in the same period. However, HDFC Life gained marginally 0.3% from February 01, 2021- February 26, 2021.
IIFL Finance NCD - All you need to know
IIFL Finance Ltd has launched IIFL Bonds, a Non-Convertible Debenture (NCD) issue of up to ₹1,000 crore, offering an effective yield of up to 10.03%. This latest issue of unsecured NCDs has a base size of ₹100 crore with a option to retain oversubscription of up to ₹900 crore. The funds raised through the issue would be used for onward lending, financing, and for repayment or prepayment of interest and principal of existing borrowings of the company apart from general corporate purposes.
This issue has a long-term credit rating of AA/Negative by Crisil, AA+/Negative by Brickwork.
IIFL Group's non-banking finance arm, IIFL Finance Limited, is a systemically important Non-Banking Financial Company not accepting public deposits and engaged in the business of home and property loans, gold loans, loan against securities, SME business and micro-finance loans..
The promoters of the company are Mr. Nirmal Jain and Mr. Venkataraman Rajamani. As at 31st December 2020, the company’s consolidated assets under management was Rs 4,22,641.05 million.
|Issue Opens on||3rd March, 2021|
|Issue Closes on||23rd March, 2021|
|Registrar||Link Intime India Pvt Limited|
|Allotment||First Come First Served Basis|
|Listing On||BSE Limited and National Stock
Exchange of India Limited
|Issue Price||₹1,000 per NCD|
|Face Value||₹1,000 per NCD|
|Minimum Application||₹10,000/- only|
|Issue Size||₹10,000 million (₹1000 cr)|
|Nature||Subordinated Redeemable Bonds|
|Credit Ratings||CRISIL AA/Negative and
|Payment Frequency||Monthly, Annually, At Maturity|
What is NCD?
NCD, also known as Non-convertible debentures, is a fixed income product that offers far better returns when compared with Fixed Deposits or convertible debentures. They are usually issued by high-rated companies in the form of a public issue to accumulate long-term capital appreciation. Investing in NCDs helps you earn better returns, offers the liquidity, is a low-risk instrument and offers tax benefits when compared to convertible debentures.
Why IIFL Bonds 2021?
1. IIFL Bonds offer annualized returns of 10% p.a., which means you can double your money in 87 months.
2. Offers monthly, yearly and cumulative income options
3. Rated AA by CRISIL, which indicates high degree of safety regarding timely servicing of financial obligations
4. No TDS on interest income
5. These bonds will be listed on NSE & BSE
How to Invest in IIFL NCD?
1. Visit invest.5paisa.com/ncd
2. Enter your UPI Id.
3. Enter the quantity of NCDs you wish to apply for. Total application amount should be between Rs.10,000 (10 NCDs) and Rs.2,00,000 (200 NCDs)
4. Submit your application
5. You should receive an UPI mandate on your UPI app within approx. 2 hours, please authorize it.
Cilck here for more details
Kalyan Jewellers IPO Note
Kalyan Jewellers IPO Details
Issue Opens: March 16, 2021
Issue Closes: March 18, 2021
Price Band: ₹86 -87 per equity share
Issue Size: ~₹1175cr
Bid lot: 172 Equity shares
Issue Type: Book building
About the Company
Kalyan Jewellers India Limited is one of the largest jewellery companies in India based on revenue as of March 31, 2020. It is a pan-India jewellery company with 107 showrooms located across 21 states and union territories in India, and 30 showrooms located in the Middle East.
The company designs, manufactures, and sells a wide range of gold, studded, and other jewellery products across various price points ranging from jewellery for special occasions, such as weddings, to daily-wear jewellery.
Kalyan Jewellers was one of the first jewellery companies in India to voluntarily have all of its jewellery BIS hallmarked and accompanied by a detailed price tag detailing the price of various components used in the final product. This initiative along with customer education and awareness campaigns around the lack of transparency in the Indian jewellery industry has helped the brand become a trusted name in jewellery in India.
Objects of the Offer:
The IPO proceed will be utilized towards following purposes:
- To meet the working capital requirements and
- To meet general corporate purposes.
|(₹ Cr., unless specified)||FY18||FY19||FY20||Dec 20|
|Profit after Tax||141||-4.8||14.2||-79.9|
- The Indian jewellery industry has largely been unorganised and fragmented, comprising more than 500,000 local goldsmiths and jewellers, as per the Technopak Report. Indian jewellery customers have historically struggled with a lack of transparency embedded in the purchase process for jewellery, finding it difficult to verify gold purity and weight and to deconstruct the various components of jewellery prices, including differentiating between raw material costs and jeweller mark-ups or making charges. The company have endeavoured to establish a strong brand in the Indian jewellery market that our customers associate with trust and transparency. According to the Technopak Report, Kalyan Jewellers is among the pioneers in the Indian jewellery market in (a) educating consumers about the aforementioned industry issues; (b) instituting the highest quality standards for our jewellery, and (c) introducing complete price transparency with our products. Through the following initiatives, coupled with concurrent customer education and awareness campaigns, particularly through “My Kalyan” network, the company have helped strengthen its brand by building customer trust and promoting transparency.
- Kalyan Jewellers is one of the largest jewellery companies in India based on revenue as of March 31, 2020, according to the Technopak Report. We have a pan-India presence with 107 showrooms located across 21 states and union territories in India and also have 30 showrooms located in the Middle East, as of December 31, 2020. In Fiscal 2020 and in the nine months ended December 31, 2020, 78.19% and 86.21% of our revenue from operations was from India and 21.81% and 13.79% was from the Middle East.
- The company has a hyperlocal strategy where it localizes its product portfolio, brand communication & strategy, showroom experience, and My Kalyan network, according to each market segment.
- Leverage scalable business model to expand our showroom network and diversify our channels of distribution.
- Widen product offerings to further increase our consumer reach.
- Leverage “My Kalyan” network to deepen customer outreach and strengthen the distribution network in our core markets
- Invest in CRM, marketing and analytics to more effectively target consumers and drive sales
Know more about Kalyan Jewellers IPO by visiting the given link.
FY21: A Rocking Year for the IPOs
29 IPOs were listed in the FY21 with an issue size of more than Rs 200 cr. The 29 IPOs raised ~29000 cr. Some IPOs like Mrs. Bectors Food Specialities Limited, Burger King India Limited, Mazagon Dock Shipbuilders Limited, Chemcon Speciality Chemicals Limited, Happiest Minds Technologies Ltd, Nazara Technologies Limited, Laxmi Organic Industries Limited, Easy Trip Planners Limited and Indigo Paints Limited were subscribed more than 100 times.16 out of 29 IPOs listed at premium over the issue price.
MTAR Technologies signed off the year by being the highest subscribed IPO, 200 times.
Let’s discuss, some of the IPOs of FY21 in detail.
|Company Name||List Date||Issue
|Gain/ Loss on
|Last Close/Issue Price
|Nazara Technologies Ltd.||30-Mar-2021||1,101.00||1,971.00||1,465.00||79.00%||-25.70%||33.10%|
|Kalyan Jewellers India Ltd.||26-Mar-2021||87||73.9||68.1||-15.10%||-7.80%||-21.70%|
|Suryoday Small Finance Bank Ltd.||26-Mar-2021||305||293||273.8||-3.90%||-6.60%||-10.20%|
|Craftsman Automation Ltd.||25-Mar-2021||1,490.00||1,350.00||1,417.90||-9.40%||5.00%||-4.80%|
|Laxmi Organic Industries Ltd.||25-Mar-2021||130||156.2||174.3||20.20%||11.60%||34.00%|
|Anupam Rasayan India Ltd.||24-Mar-2021||555||534.7||490.5||-3.70%||-8.30%||-11.60%|
|Easy Trip Planners Ltd.||19-Mar-2021||187||206||209.6||10.20%||1.70%||12.10%|
|MTAR Technologies Ltd.||15-Mar-2021||575||1,063.90||1,023.90||85.00%||-3.80%||78.10%|
|Heranba Industries Ltd.||05-Mar-2021||627||900||631.6||43.50%||-29.80%||0.70%|
|Railtel Corporation Of India Ltd.||26-Feb-2021||94||104.6||126.8||11.30%||21.20%||34.90%|
|Brookfield India Real Estate Trust REIT||16-Feb-2021||275||275.1||223.2||0.00%||-18.90%||-18.80%|
|Stove Kraft Ltd.||05-Feb-2021||385||467||458.1||21.30%||-1.90%||19.00%|
|Home First Finance Company India Ltd.||03-Feb-2021||518||612.2||448.6||18.20%||-26.70%||-13.40%|
|Indigo Paints Ltd.||02-Feb-2021||1,490.00||2,607.50||2,389.30||75.00%||-8.40%||60.40%|
|Indian Railway Finance Corporation Ltd.||29-Jan-2021||26||25||23||-3.80%||-8.20%||-11.70%|
|Antony Waste Handling Cell Ltd.||01-Jan-2021||315||430||243.9||36.50%||-43.30%||-22.60%|
|Mrs. Bectors Foods Specialities Ltd.||24-Dec-2020||288||501||336.1||74.00%||-32.90%||16.70%|
|Burger King India Ltd.||14-Dec-2020||60||115.4||129.1||92.30%||11.90%||115.20%|
|Gland Pharma Ltd.||20-Nov-2020||1,500.00||1,701.00||2,477.80||13.40%||45.70%||65.20%|
|Equitas Small Finance Bank Ltd.||02-Nov-2020||33||31||60.1||-6.10%||93.70%||82.00%|
|UTI Asset Management Company Ltd.||12-Oct-2020||554||490.3||582.6||-11.50%||18.80%||5.20%|
|Mazagon Dock Shipbuilders Ltd.||12-Oct-2020||145||216.3||212.6||49.10%||-1.70%||46.60%|
|Angel Broking Ltd.||05-Oct-2020||306||275||291.1||-10.10%||5.90%||-4.90%|
|Computer Age Management Services Ltd.||01-Oct-2020||1,230.00||1,518.00||1,852.70||23.40%||22.00%||50.60%|
|Chemcon Speciality Chemicals Ltd.||01-Oct-2020||340||731||407.5||115.00%||-44.30%||19.90%|
|Route Mobile Ltd.||21-Sep-2020||350||708||1,410.60||102.30%||99.20%||303.00%|
|Happiest Minds Technologies Ltd.||17-Sep-2020||166||351||540.1||111.40%||53.90%||225.40%|
|Mindspace Business Parks REIT||07-Aug-2020||275||304||294.7||10.50%||-3.10%||7.20%|
|Rossari Biotech Ltd.||23-Jul-2020||425||670||1,037.60||57.60%||54.90%||144.10%|
Source: Ace Equity,
Last close as on 31st March 2021. List and close price is as per BSE.
Nazara Technologies India Ltd (Nazara) is a leading India based diversified gaming and sports media platform with presence in India and across emerging and developed global markets such as Africa and North America. Its offerings include interactive gaming, eSports and gamified early learning ecosystems. Some of the marquee individual investors include Mr. Rakesh Jhunjhunwala and Mr. Utpal Sheth.
The stock listed at 79% premium over the issue price. The Nazara Technologies IPO was subscribed 175.4 times. The issue size was Rs 321.60 cr.
Kalyan Jewellers India Ltd.
Kalyan Jewellers India Limited is one of the largest jewellery companies in India based on revenue as of March 31, 2020. It is a pan-India jewellery company with 107 showrooms located across 21 states and union territories in India, and 30 showrooms located in the Middle East. The company designs, manufactures, and sells a wide range of gold, studded, and other jewellery products across various price points ranging from jewellery for special occasions, such as weddings, to daily-wear jewellery.
The stock listed at 15% discount over the issue price. The IPO was subscribed 2.61 times. The issue size was Rs 832.67 cr.
Laxmi Organic Industries Ltd.
Laxmi Organic Industries Ltd is a specialty chemical manufacturer that operates in 2 business segments; Acetyl Intermediates (AI) and Specialty Intermediates (SI). It is the leading manufacturer of ethyl acetate with over 30% market share in the Indian ethyl acetate market and the only manufacturer of diketene derivatives in India.
The stock listed at 20% premium over the issue price. The IPO was subscribed 106.8 times. The issue size was Rs 423.26 cr.
Easy Trip Planners Ltd.
Easy Trip Planners Limited offers ‘end to end’ travel solutions which include air tickets, hotels and holiday packages, rail tickets, bus tickets and taxis as well as ancillary value added services. As per industry reports, it is ranked 2nd among the Key OTAs in India in terms of booking volume during 9MFY21 and third among the Key OTAs in India in terms of GBV in FY20.
The stock listed at 10% premium over the issue price. The IPO was subscribed 159.3times. The issue size was Rs 282.01 cr.
MTAR Technologies Ltd.
MTAR Technologies (MTAR) is a leading precision engineering solutions company engaged in the manufacture of mission critical precision components with close tolerances (5-10 microns), and in critical assemblies, to serve projects of high national importance, through its precision machining, assembly, testing, quality control, and specialized fabrication competencies, some of which have been indigenously developed and manufactured (Source: CRISIL Report). MTAR primarily serves customers in the clean energy, nuclear and space & defence, sectors. Some of its key customers include Nuclear Power Corporation of India Limited, Indian Space Research Organisation, Defence Research and Development Organisation, and Bloom Energy Inc., United States
The stock listed at 85% premium over the issue price. The IPO was subscribed 200.7 times. The issue size was Rs 417.49 cr.
Anupam Rasayan India Ltd.
Having commenced business as a partnership firm in 1984 as a manufacturer of conventional products, Anupam Rasayan India (ARIL) has evolved over the years into custom synthesis and manufacturing of life science related specialty chemicals and other specialty chemicals, which involve multi-step synthesis and complex technologies, for Indian and global customers. It has two distinct verticals, life science related specialty chemicals (95.37 % for revenue from operations for FY20) comprising products related to agrochemicals, personal care and pharmaceuticals and other specialty chemicals.
The stock listed at 4% discount over the issue price. The IPO was subscribed 44 times. The issue size was Rs 538.45 cr.
Indigo Paints Ltd.
Indigo Paints (Indigo) is the fifth-largest decorative paints company in India, with a larger presence in tier 3/4 towns and rural areas coupled with a strong portfolio of differentiated products. Indigo derives 45% of its sales from emulsion paints. Also, it has a distinguished portfolio of differentiated products based on end-use and value-added properties, which include products such as floor coat emulsion, bright ceiling coat, tile coat, dirt-proof and waterproof exterior laminate.
The stock listed at 75% premium over the issue price. The IPO was subscribed 117 times. The issue size was Rs 1,160.13 cr.
Mrs. Bectors Foods Specialities Ltd.
Mrs. Bectors Food Specialities Limited (MBFSL) is one of the leading companies in the premium and mid-premium biscuits segment and the premium bakery companies in the North Indian (Source: Technopak Report). It manufactures and markets its premium and mid-premium biscuits under its flagship brand ‘Mrs. Bector’s Cremica’ and its bakery products in savory and sweet categories under its brand ‘English Oven’.
The stock listed at 74% premium over the issue price. The IPO was subscribed 198 times. The issue size was Rs 544.35 cr.
Burger King India Ltd.
Burger King India (BKI) is the national master franchisee of the BURGER KING® brand in India, with exclusive rights to develop, establish, operate and franchise Burger King branded restaurants in India. Since the opening of its first restaurant in November 2014, it has reached 200+ stores in less than five years. Its total restaurant count stands at 261 as on September 30, 2020 including eight Sub-Franchised Burger King Restaurants, across 17 states and union territories and 57 cities across India.
The stock listed at 92% premium over the issue price. The IPO was subscribed 156.6 times. The issue size was Rs 810 cr.
Mazagon Dock Shipbuilders Ltd.
Mazagon Dock Shipbuilders Ltd. (MDL) is a Defence Public Sector Undertaking under ministry of Defence. It is one of the India’s leading shipyards with a maximum shipbuilding and submarine capacity of 40,000 DWT (Source: Crisil). The shipyard builds and repair warships and conventional submarines at its facilities in Mumbai and Nhava for the MoD for use by the Indian Navy and other vessels for commercial clients. Since 1960, MDL has built a total of 795 vessels including 25 warships, from advanced destroyers to missile boats and three submarines. MDL had also delivered cargo ships, passenger ships, supply vessels, multipurpose suppose vessels, water tankers, tugs, dredgers, fishing trawlers, barges and border outposts for various customers in India as well as abroad.
The stock listed at 49% premium over the issue price. The IPO was subscribed 157.4 times. The issue size was Rs 443.69 cr.
Route Mobile Ltd.
Route Mobile Ltd. (RML) is a leading Global Cloud Communications Platform service provider, catering to enterprises, over-the top (OTT) players and mobile network operators (MNOs). Its range of services include messaging, Rich Communication Services (RCS), OTT business messaging, voice, email and SMS filtering, omni-channel communication, analytics & monetization.
The stock listed at 102% premium over the issue price. The IPO was subscribed 73.3 times. The issue size was Rs 608.70 cr.
Happiest Minds Technologies Ltd.
Happiest Minds Technologies Ltd. (HMTPL), is a relatively younger IT solutions provider (Incorporated in FY11) which was born digital and has specialization in disruptive technologies. It offers services like Software and Infrastructure as a Service, Security, Analytics, and IoT. As on FY20, its Product Engineering Services (PES, 50.5% of revenue) was the largest BU while Edu-Tech and Hi-Tech are the largest verticals accounting for ~21% of revenue.
The stock listed at 111%premium over the issue price. The IPO was subscribed 150.9 times. The issue size was Rs 386.11 cr.
The Road Ahead:
The pipeline for FY22 also looks strong with 18 companies holding market regulator Securities and Exchange Board of India’s (Sebi’s) approval proposing to raise nearly Rs 18,000 crore and another 14 awaiting the market regulator’s approval to raise nearly Rs 23,000 crore as per the media reports. “After the huge success in FY21, market experts believe that investors will be cautious and choose only those IPOs that are priced attractively and where companies operate in a niche segment.
Disclaimer: The above details is compiled from information available on public platforms. These are not buy or sell recommendations.
Market Performance in March 2021
Indian markets witnessed volatility during the month as risk-off sentiments affected the emerging economies
Nifty 50 edged up 1.1%, while BSE Sensex rose 0.8% on MoM basis in March 2021
Mid and small cap indexes outperformed large cap indexes due to retail investors’ continued interest in the broader market
FIIs bought ₹19,124cr (vs. ₹19,747cr bought MoM) in Indian equities, while DIIs bought ₹2,476cr worth of equities (vs. ₹16,306cr sold MoM) during the month
Fixed Income Market
During March month, India’s 10-year bond yields were almost flat at around 6.18% on stable FII flows amid signs of economic recovery
Meanwhile, the Govt. unveiled a very aggressive borrowings plan to auction ₹7.24 trillion ($99 billion) of bonds in the first half of FY22
The World Bank raised its forecast of India’s FY22 growth to 10.1% (vs. its earlier forecast of 5.4%) as it feel country's vaccination drive and Govt’s infrastructure push in the national budget can aid growth momentum and revive domestic demand
The market witnessed huge volatility in March 2021. Below are the top 5 gainers and losers on Nifty50 in March 2021.
|Company Name||01 March 2021||31 March 2021||Gain/Loss|
|JSW Steel Ltd.||405||469||15.60%|
|Grasim Industries Ltd.||1,266||1,451||14.60%|
|Hindustan Unilever Ltd.||2,143.40||2,431.50||13.40%|
|Tata Steel Ltd.||730.4||811.9||11.20%|
Source: Ace Equity
Coal India Ltd.
The stock plummeted 15.5% in March 2021 as Coal India‘s production in February fell 6.6% to 61.9 million tonnes against 66.2 mt in February 2019.
Hero MotoCorp Ltd.
The stock fell 13% in the same month as the company will make an upward revision in the ex-showroom prices of its motorcycles and scooters, with effect from April 1, 2021, in order to partially offset the impact of higher commodity costs.
Other stocks that were top losers on Nifty50 were Oil & Natural Gas Corporation Ltd, IndusInd Bank Ltd and Indian Oil Corporation Ltd.
Disclaimer: The above report is compiled from information available on the public platforms. These are not buy or sell recommendations.
Macrotech Developers Ltd Information Note
Macrotech Developers Ltd IPO
Issue Opens: April 07, 2021
Issue Closes: April 09, 2021
Price Band: ₹483-486#
Issue Size: ₹2,500 cr#
Bid lot: 30 Equity shares
Issue Type: 100% Book building
Macrotech Developers Ltd Shareholding Pattern
|% Shareholding||Pre IPO|
|Promoter and Promoter Group||62|
Macrotech Developers Ltd. (MDL) is one of the largest real estate developers in India, by residential sales value for the period FY14 to FY20 (Source: Anarock Report). Its core business is residential real estate developments with a focus on affordable and mid-income housing and currently has residential projects in the Mumbai Metropolitan Region (MMR) and Pune. MDL, in 2019, forayed into the development of logistics and industrial parks and entered into a JV with ESR Mumbai 3 Pte. MDL also develops commercial real estate, including as part of mixed-use developments in and around its core residential projects. MDL has strong focus on de-risking projects and improving return on investments with fast turnaround time from acquisition to launch to completion. As of December 31, 2020, MDL has 91 completed projects comprising approximately 77.22 mn sq. ft. of Developable Area, has 36 ongoing projects comprising approximately 28.78 mn sq. ft. of Developable Area and has 18 planned projects comprising approximately 45.08 mn sq. ft. of Developable Area across different segments like affordable and mid-income housing, premium and luxury housing, office space and retail space. Apart from the above, MDL as of December 31, 2020, has land reserves of approximately 3,803 acres for future development in the MMR, with the potential to develop approximately 322 mn sq. ft. of Developable Area.
Object of the Offer
The offer comprises entirely of Fresh Issue of 5.14 cr shares aggregating to ₹2,500 cr (at upper end of the price band). Proceeds from the fresh issue are proposed to be utilized towards
1. ~₹1,500 cr for reduction of the aggregate outstanding borrowings of MDL on a consolidated basis,
2. ₹375 cr for acquisition of land or land development rights and
3. Balance for general corporate purposes.
Key Financials and Operational Metrics
|Sales (Value in ₹Cr)||8,130||7,163||6,570||--||3,351|
|Sales (Developable Area in mn sq. ft.)||7.4||6.37||6.18||--||3.3|
|Sales (number of units)||6,844||5,975||5,912||--||3,163|
|Gross Collections (₹ Cr)||8,564||9,065||8,190||--||2,893|
|Completed Developable Area (mn sq. ft.)||13.75||6.39||15.65||--||0|
|Revenue from Operations (₹ Cr)||13,527||11,907||9,577||7,463.00||2,915.00|
|Adjusted EBITDA (₹Cr)||768||2,414||2,925||3,684||4,039|
|Adjusted EBITDAM (%)||29.9||30.9||30.5||32||26|
|Restated PAT (₹ Cr)||1,784||1,672||1,206||884||-264|
|PAT Margin (%)||13.2||14||12.6||11.8||-9.1|
|Return on Net Worth (%)||101.1||48.3||17.8||15||-7|
Description of Business
Broadly, MDL’s business can be classified into the following:
- Residential portfolio (Affordable and mid-income housing projects; and Premium and luxury housing projects)
- Logistics and industrial park portfolio
- Commercial portfolio (Office projects; and Retail projects).
- One of India’s largest residential real estate developers with a leadership position in the attractive MMR market
MDL’s sales from India Operations for FY20 and 9MFY21 were ₹6,570 cr and ₹3,351 cr, respectively. Its Gross Collections from India Operations for FY20 and 9MFY21 were ₹8,190 cr and ₹2,893 cr, respectively. The MMR is considered the most attractive real estate market in the Top Seven Indian Markets, having the largest share of supply and absorption, as well as the highest average base selling price, of residential units from 2016 to 2020, catering to a wide spectrum of income and demography (Source: Anarock Report). MDL believes that the MMR has significant depth of demand for real estate developments across price points and that the MMR real estate market has high barriers to entry due to limited land availability, high prices of land and knowledge of the regulatory and approval processes required for developing a project. As a result of MDL’s strong brand, existing land reserves and industry knowledge & regulatory environment know-how in the MMR, MDL has attained a leadership position in the South Central Mumbai, Thane and the Extended Eastern Suburbs micro-markets of the MMR, with the largest share of supply (by units), absorption (by value) and completion (by area) of residential developments, among the five largest developers in the respective micro-market, from 2015 to 2020 (Source: Anarock Report). As per Anarock report, MDL has a strong presence in the Extended Western Suburb micro-market of the MMR, with the 2nd largest share of absorption (by value) and the 5th largest share of supply (of units) of residential developments, among the five largest developers in the respective micro-market, from 2015 to 2020. In addition, MDL has several planned projects in the MMR, which they believe will enable them to have a robust launch pipeline over the next few years.
- Well-established brand with ability to sell at premium pricing and throughout the construction phase
The company believes that its strong and recognizable brand is a key attribute in the industry, since it increases customer confidence, influences buying decision and helps target premium pricing for products. MDL focuses on branded realty, with a belief in developing and marketing its real estate projects as “branded products”. MDL’s brands include “CASA by Lodha”, “Crown –Lodha Quality Homes”, and “Lodha” for affordable and mid-income housing projects, the “Lodha” and “Lodha Luxury” brands for premium and luxury housing projects and “iThink”, “Lodha Excelus” and “Lodha Supremus” for its office spaces. The company believes that the strength of its brand and its association with trust, quality and reliability is primarily driven by its track record of delivering quality products, with modern amenities and innovative design elements and landscapes, largely within committed timelines. MDL has also increased its brand recall through celebrity endorsements and by collaborating with luxury designers. MDL typically aims to sell over 80% of the Saleable Area of a project during the construction phase. MDL leverages its brand value and focuses on selling sizeable percentage of units within one year from the launch of a project as well as prior to the receipt of the occupation certificate, which assists them in generating operating cash flows during the construction phase. Such sales help reduce the need for construction finance and enable them to achieve optimal returns on their projects. The company also believes that they have been able to leverage their brand presence, customer confidence, track record of successfully delivering projects and superior construction quality to increase sales volumes and also command premium pricing for its products vis-à-vis other projects in the respective micro-markets.
- Highly diversified portfolio across price points and micro-markets in the MMR with a focus on affordable and mid-income housing
MDL has a diversified portfolio of residential developments, spread across price points and micro-markets in the MMR. Its developments cater to wide spectrum of economic and demographic segments, from luxury residences in South Mumbai to large, integrated townships in the extended suburbs offering affordable homes. Over the years, MDL has established a strong reputation and track record in affordable and mid-income as well as premium housing projects. In affordable and mid-income housing, MDL has introduced one or more high-quality amenities, such as a large swimming pool, a private movie theatre, a cricket ground, a football stadium and an indoor swimming pool. MDL has developed prominent projects in the premium and luxury housing category in their respective locations as well. The company believes that its ability to design a high-quality and differentiated product and positioning it to the target segment through appropriate marketing and branding strategy, has enabled MDL to deliver several prominent projects in the premium and luxury housing category. Additionally, MDL believes that significant portfolio of completed and near-complete inventory in its premium and luxury housing, coupled with limited land availability in the South Central Mumbai micro-market where their premium and luxury housing projects are located, will drive sales volumes in this segment for MDL.
- Unique ability to develop townships and generate annuity-like cash flows from them
MDL has the ability to identify land, acquire it at competitive cost, aggregate it from several landowners and design a master plan to develop township projects. Upon development of the townships, Government agencies develop the surrounding infrastructure such as enhancing road and railway connectivity to improve the standard of living for the residents of the townships. MDL is currently developing large townships located at Palava (Navi Mumbai, Dombivali Region) and Upper Thane under affordable and mid-income housing projects. The company believes that its ability to develop such townships, coupled with the strength of its brand and innovative sales and marketing strategies will help them drive sales volumes and generate recurring operating cash flows. As of December 31, 2020, they also have land reserves of 3,303 acres at Palava and 500 acres at Upper Thane, and total Saleable Area of 37.6 mn sq. ft and 5.6 mn sq. ft with respect to its completed and on-going projects at Palava and Upper Thane, respectively.
- MDL has substantial amount of debt (₹18,662 cr of aggregate outstanding borrowings on a consolidated basis as of December 31, 2020), which could affect its ability to obtain future financing or pursue growth strategy. The company also has contingent liabilities aggregating to ₹782 cr as of December 31, 2020.
- COVID-19 has caused construction delays due to varying factors, caused a material decline in general business activity, impacted lease commitments for commercial developments, etc. The extent to which COVID-19 may affect MDL’s business and operations in the future is uncertain and cannot be predicted.
- There are material outstanding legal proceedings involving the Company, Subsidiaries, Associates, Directors, Promoters and Group Companies. These proceedings are pending at different levels of adjudication before various courts, tribunals, enquiry officers and appellate tribunals.