Motilal Oswal Securities has reiterated a BUY call on Lodha Developers, projecting a robust 36% upside with a revised target price of Rs 1,870 per share. The research underscores Lodha’s aggressive expansion into new geographies, strong presales momentum, and prudent financial management, positioning it as a compelling play in India’s real estate sector. With presales expected to clock a 20% CAGR over FY25-27E, healthy collections, and a conservative net debt profile, the company is set for sustained growth. The report highlights Lodha’s strategic land acquisitions, expansion into commercial and industrial segments, and significant monetization potential at Palava, all of which underpin the bullish outlook. Investors are advised to consider Lodha for its growth visibility, operational consistency, and attractive risk-reward profile at current levels.

Motilal Oswal Reiterates BUY: Target Price Raised to Rs 1,870

Motilal Oswal Securities has reaffirmed its BUY rating on Lodha Developers, increasing the target price to Rs 1,870 per share, representing a 36% upside from the current market price of Rs 1,375. This revision is underpinned by Lodha’s consistent operational performance, expansion into new markets, and a well-calibrated balance sheet that supports growth without compromising financial discipline.

Presales Growth: 20% CAGR Expected Through FY27

Lodha’s presales are forecasted to register a 20% compound annual growth rate (CAGR) over FY25-27E, reaching Rs 253 billion by FY27. In FY25, presales grew 21% year-on-year to Rs 176.3 billion, surpassing company guidance. The first quarter of FY26 saw presales of Rs 44.5 billion, up 10% YoY, despite macro headwinds. The company’s robust launch pipeline, healthy execution, and expansion into Pune and Bangalore are expected to sustain this momentum. For FY26, management has guided for presales of Rs 210 billion and volumes of 11 million square feet.

Strategic Expansion: New Markets and Project Pipeline

Lodha is accelerating its presence in Pune and Bangalore, with a notable 5.6 million sq ft project acquisition in Bangalore (GDV: Rs 66 billion) in FY25 and a strong pipeline of launches across MMR, Pune, and Bengaluru. The company added 10 new projects in FY25 and 5 more in Q1FY26, collectively meeting 91% of its FY26 business development guidance in just one quarter. Lodha’s entry into NCR and Chennai for commercial projects further diversifies its portfolio. The management aims to increase Bangalore’s share of sales from 4% to 15% over the next decade.

Palava Township: A Multi-Decadal Monetization Engine

Palava Township remains a key value driver, with a land bank of approximately 600 million sq ft and plans to monetize at least one land deal annually. The company values 250 million sq ft of residential land at Palava at Rs 637 billion, to be monetized over the next 30 years. Recent data center land deals with global hyperscalers have delivered 8x growth in land transactions since IPO, positioning Palava as a future data center hub. Infrastructure catalysts like the Airoli-Katai tunnel and Navi Mumbai Airport are expected to further boost absorption and sales.

Financial Discipline: Conservative Debt and Strong Cash Flows

Lodha’s net debt-to-equity ratio stands at a comfortable 0.2x as of FY25, with expectations to reduce it to 0.1x by FY27E, supported by robust operating cash flows. Despite significant investments in business development, net debt remains well below the 0.5x ceiling. Operating cash flow after expenses and taxes is projected to grow at a 23% CAGR, reaching Rs 99 billion by FY27E. This financial prudence ensures that growth ambitions do not compromise balance sheet health.

Commercial and Industrial Portfolio: Recurring Revenue Growth

The annuity portfolio is projected to be 82% leased by FY27E, with net lease income expected to reach Rs 6.2 billion, reflecting a 29% CAGR over FY25-27E. The company’s commercial footprint spans MMR, Thane, South Central, and Palava, with new digital infrastructure projects planned in NCR and Chennai. Revenue from the industrial segment is expected to hit Rs 11.6 billion by FY27E, with an EBITDA margin of 75%. Regular land monetization, particularly for data centers, will provide a steady stream of recurring revenue.

Operational Performance: Robust Revenue and Profit Growth

FY25 saw revenue, EBITDA, and adjusted PAT rise by 34%, 49%, and 70% YoY, respectively, with revenue expected to reach Rs 189 billion and EBITDA Rs 54 billion by FY27E. The EBITDA margin is forecasted at 29%, while PAT is projected to grow at a 13% CAGR to Rs 35 billion by FY27E, with a profit margin of 19%. Return on equity is estimated to improve to 15% by FY27E, up from 10% in FY24.

Valuation: Sum-of-the-Parts Approach Indicates Significant Upside

Motilal Oswal values Lodha Developers using a sum-of-the-parts (SoTP) methodology, arriving at a net asset value (NAV) of Rs 1,870 per share after applying a 40% premium to the base NAV. The residential segment is valued via discounted cash flows, commercial assets at an 8.5% cap rate, and industrial assets by present value of future cash flows. The table below summarizes the SoTP valuation:

Key Investment Levels and Targets

Current Market Price (CMP): Rs 1,375

Target Price (TP): Rs 1,870 (36% upside)

Recommended Action: BUY

Investors seeking exposure to India’s real estate growth story, with a focus on operational excellence, disciplined financial management, and strategic expansion, should consider Lodha Developers as a core portfolio holding at current levels.