Lodha Developers Ltd (LODHA) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day, and welcome to the Lodha Developers Limited Q2 FY '27 Analyst Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing "*" then "0" on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Chintan Parekh from Lodha Developers Limited. Thank you, and over to you, sir.
Chintan Parekh (Lodha Developers Ltd): Thank you, Swapnali. Welcome to Lodha Developers Q2 FY '27 Conference Call. Today, we have with us, Mr. Abhishek Lodha - Managing Director, Mr. Sushil Kumar Modi - Group Financial Director, Mr. Sanjay Chauhan - Chief Financial Officer, Mr. Rajendra Joshi - CEO, Bengaluru. I would now like to invite Abhishek to make his opening remarks. Over to you, Abhishek.
Abhishek Lodha (Lodha Developers Ltd): Thank you, Chintan. Good afternoon, everyone, and thank you for joining us. Wishing all of you and your families a very Happy Diwali and a prosperous New Year ahead. The first half of fiscal '27 has been the strongest in Lodha's history. We delivered profit after tax of 2,386 crores, which is up 63%. Our revenue at 9,460 crores is up 30%. Our pre-sales of 96 billion are up by 7%, all three being the highest ever in our history. We have achieved this while moderately reducing our net debt, which now stands at five, about 52 billion INR, about 0.2 times equity. As we had told you at the start of the year, our H1 pre-sales would be about 40% to 42% in the first half and the balance in the second half. These were, came in at about 40.3%. The numbers for the second half of the year are likely to be coming with a mix of about 6,000 to 7,000 crores of development company pre-sales in both Q3 as well as Q4 and one data center land transaction of about 1,500 crores in the fourth quarter for the full-year number at about 24,000 crores of pre-sales. Having said that, we expect to easily beat our profit guidance of 20% growth, which would have taken us to just over 4,000 crores and in the first half, having already touched 20
Abhishek Lodha (Lodha Developers Ltd): 100 crores. We feel very confident of being able to beat this guidance quite comfortably. Over the medium term, we believe that the underlying profitability of the business is getting better and therefore will support an improvement in our return on equity further and will also aid our therefore to become net debt free over the next two to three years, which is in line with our previous guidance. In terms of where we stand now, at the start at the start of the second half, we've had a strong start to the third quarter. October, the festive season has been strong. We expect that the momentum in the market will continue through this year, and this is in spite of the fact that the adverse effects, if any, of the rise in interest rates have already started being felt. We believe that the segments that we serve are not really affected by the change in interest rates, and hence, we feel that there will be no adverse effect of any moderate further increase in in interest rates from this point onwards. I would like to highlight, in terms of our Q2 performance, that our new launch in Bengaluru delivered significant success, and therefore, Bengaluru's pre-sales for the first half, for the second quarter, was over 1,800 crores. This tells you about the significance of the fact that we've delivered 96 billion of sales in the first half with only 4,000 crores of GDV of new launches. In the second half of the year, we have or we have a further almost just under 20,000 crores of new launches planned. And while one or two launches may move by a month or two, overall, the program is a very solid and dispersed program across different geographies, which will enable us to deliver on our guidance for the year. I would also like to update you that we've just entered and have started the pre-sales for our first project in Gurugram NCR. And the start has been quite constructive, and we believe that this will be the start of the fourth city, which will over time contribute to our growth and our profitability. In terms of other updates, the Mulund-Airoli-Palava freeway is now physically complete. And we think that it will open in the next few weeks, and with that, Airoli will be just 20 minutes from Palava and Mulund will be only a 25-minute drive from Palava. Both of these will make a big difference to Palava's attractiveness. And we start and we expect that calendar year 2027 will lead to a significant uptick in pre-sales at Palava on account of this infrastructural improvement. Obviously, the opening of the bullet train, which is scheduled for 2029, will be a significant step further in the direction of Palava moving from a secondary suburb to becoming a primary suburb. In terms of our collections and cash flows, the first half collections were at about 76 billion, up 19% year-on-year, and the operating cash flow was about 27 billion. The Q2 collections were about 35 billion, following the usual pattern whereas the Q1 collections obviously had the land transaction as a part of it, and hence were were higher. In the second half, we expect that our operating cash flow, as it was in last fiscal, will significantly crank up, and we expect full year that our operating cash flow will be around 85 billion or thereabouts. In terms of our data center platform, we are seeing good progress both in the land demand as well as in the BTS boxes. We expect to have the definitive documents executed for the first BTS box of in this fiscal year and to start construction for that boxes also in this fiscal year with a view to delivering those boxes to the end tenant in fiscal '29, and therefore starting the rental earnings from our data center BTS program in fiscal '29 itself. In addition to this, we expect the land sales to be an ongoing and continuous and predictable pattern with one transaction
Abhishek Lodha (Lodha Developers Ltd): happening every six months or thereabouts. And this will lead to a significant not only cash flow, but also positive impact on profitability. Speaking of profitability, I would like to point out that the numbers that you see for Q2 are really the underlying profitability of solely the development business because there were no land sales in this quarter. And that the both the the embedded EBITDA as well as the PAT are a real reflection of the strength of profitability of the business driven by the strength of our brand. In terms of the industry, there are few questions which often come up, and I would like to to share our views about these. The first one is the war in the Middle East and how it is affecting housing demand. In our opinion, the direct demand effect is limited to the NRI demand from the from the Gulf, which is about 4% to 5% of the sales. The broader effects due to the effective management of the fuel availability as well as prices by the government have been largely absorbed and that is reflected in India's June quarter GDP growth at about 7.8% and industrial production growing by over 6.7% in September. We are hopeful that the as and when the Middle East situation stabilizes, there will be a positive momentum to Indian growth with oil prices coming down and, as a consequence, is being supportive of both the Indian rupee as well as domestic growth. In terms of the 25 basis points increase in the repo rate by the RBI in October, we would like to point out that our sales are focused, about 50% of our sales by value come in the segment between 1 to 5 crores of of the value of the unit and the balance comes from the segment above 5 crores. The impact of mortgages on the segment above 5 crores is negligible, and hence we do not expect any impact of interest rate increases in that segment. In the segment between 1 to 5 crores, we see an average LTV of high 40s, low 50s. And while there will be some moderate impact of the increase in interest rates on this segment, we see no change in our outlook, which is really driven by the significant gap in high quality supply in the marketplace. The related and point I would like to speak about is that is there oversupply building up and whether there is a likelihood of that impacting the market going forward. We have been speaking about the redevelopment phenomenon in Mumbai for 3 years now. And as you can notice, us, as well as other large developers, continue to scale up their pre-sales. This really is a reflection of the fact that the market is getting increasingly tuned towards large, organized and branded developers, and the supply from this Grade A+ and Grade A developers is seen and dealt with by the market in a very different manner from the rest of the supply. India in the last first 9 months of 2026 has seen about 60 million square feet of office absorption, with about 40% of it by the global capability centers. We also see that AI is reorganizing workflows, but we also see that it is not all negative for India. And on the contrary, as we saw in the example of PwC, where PwC US and PwC India have come together to set up a large-scale consulting venture to serve US clients in India. We believe that AI, given the high level of technology and the high level of need for execution, implementation, support will be a positive for Indian jobs, and therefore, as by extension, housing. Our performance in Bangalore in the last quarter is indication of our belief that for the strong brands, the demand continues to remain robust and there is a much big there is a significant supply-demand gap. I would also like to highlight that Newsweek has again named Lodha amongst the world's 1,000 most trustworthy companies, the only Indian real estate company on the list for the second year running. We believe that this is a recognition of the way that our business is conducted and about how society at large, as well as our direct stakeholders like employees and customers, are perceiving our company. Through the Lodha Foundation, the Lodha
Abhishek Lodha (Lodha Developers Ltd): Sciences Institute hosted 55 researchers this quarter, with more than 90 from 15 countries expected in the coming semester. The six in six students from the Lodha Genius Stu were the team comprising of six students from the Lodha Genius Programme placed second at the 18 2026 in Switzerland, and we continue to support the communities that we work in by direct cash transfers, as well as health insurance for a large number of families. With this, I would like to hand over and call in Mr. Rajendra Joshi, the CEO of our Bangalore business, to speak about the Q2 launch that we had and what he's seeing on the ground in Bangalore. Over to you Mr. Joshi.
Rajendra Joshi (Lodha Developers Ltd): Thank you, sir. Good afternoon to everyone. I will speak in brief about the Bangalore market and our journey in Bangalore. The Bangalore residential real estate market is now over Rs. 1 lakh crores as of FY '26, nearly tripling in size over the last four to five year period, driven by both volume and price. The market has continued to premiumize with homes priced over Rs. 2 crores increasing their contribution from 40% in FY '24 to 50% in FY '26. Over the last two years, while the aggregate volume in square feet terms has largely remained steady, premium housing has continued to grow. Pricing growth has been healthy at about 10% in most locations during this period, with some pockets witnessing stronger price growth on account of improving connectivity and new job hub creations. Supply continues to be on the lower side, with an average inventory position of about 18 months in the last two years. The market continues to remain robust in FY '27, with the first half of this year recording an absorption of about 52,500 crores, up 10% over the same period of last year. Pricing momentum continues to be steady as well, with an average increase of about 6% compared to first half of FY '26. The Rs. 2 crores segment and above, in which we operate, continues to perform strongly, as we mentioned, contributes about 50% of the overall market now. Demand continues to be strong across the key growth corridors of North, East, and South East Bangalore, supported by city's growing base of white collar professionals across GCCs, technology companies, and startup ecosystem, with majority of these buyers belonging to mid to senior managers in these organizations. Office absorption being a lead indicator of residential demand remains at record levels. Bangalore recorded nearly 17 million sq ft of net office absorption in CY '25, the highest ever for the city. This is followed by 8.3 million square feet in first half of this calendar year. GCCs continue to be an important driver of this demand, and Bangalore remains a major GCC hub. Global giants such as Google, Microsoft, J.P. Morgan continue to have significant GCC presence in Bangalore, and many of these centres have moved beyond just being back office work locations to strategic hubs for AI, digital engineering, and core product development. This, I think, is something that is really driving the residential demand in the Bangalore city. The city's startup ecosystem is another important source of demand, spanning late stage and well-funded early stage companies. Consumer tech in particular has boomed over the last three to four years, with names such as Swiggy, Razorpay, Meesho, Zepto contributing to a growing unicorn base and a wave of IPOs. Looking ahead, strong job creation, sustained investor confidence in the startup ecosystem, and ongoing infrastructure development, such as the upcoming North Bangalore metro line and the Satellite Town Ring Road, are expected to be key catalysts for the continued residential growth. Coming to our journey in Bangalore, we entered Bangalore with the launch of Lodha Mirabelle next to Manyata Business Park in North Bangalore in November '23. Our first couple of years are focused on establishing Lodha as a premium brand in the city, building a
Rajendra Joshi (Lodha Developers Ltd): strong local organization and demonstrating our ability to deliver a differentiated product and a customer experience. Having successfully completed this initial phase, we are now firmly in the growth phase of our Bangalore journey. From two projects in FY '25 and about 700 crores in pre-sales, we have now grown to four operating projects in FY '26 and we achieved about 3,000 2,300 crores in pre-sales. In this year, in the second quarter, as Mr. Lodha mentioned, we have launched a project and are ready to launch another project in the second-half of this year. With this, we would have six operating projects by the end of FY '27, and we are likely to cross about 3,000 crores in pre-sales from Bangalore in this financial year. Over this period, we've also established presence across key growth corridors of Bangalore and as we have scaled, our strategic focus has remained consistent, to build premium and luxury developments in locations where we believe there is depth of end user demand and to differentiate ourselves through the quality of our product and customer experience. I would like to talk a little about the launch of Lodha Beaumont estate which Mr. Lodha mentioned. This is a mo most significant milestone in this year for us. This is a 70-acre development in North Bangalore. We have recorded sales of about 1,500 crores plus in the first 3 months since launch. The response to Beaumont estate has been particularly encouraging for us for a few reasons. First, the product differentiation. We introduced large format premium homes in a micro market where much of the existing supply was at a relatively smaller typologies and lower ticket sizes. Homes at Beaumont estate were priced above 3 crores with a few units going up to as high as 13 to 14 crores, compared to the fact that most of the competition supply was at around 2 crores. Importantly, larger and premium homes had much greater demand by our customers. Second, the premium lifestyle proposition. The project has been designed as a premium garden estate with a strong emphasis on open spaces, landscaping and high-quality amenities, including a large signature club house. We believe this differentiated proposition has resonated strongly with customers in the micromarket. Third, an exemplary customer experience. As we have done in our previous projects in Bangalore, we place significant emphasis on the quality of customer journey at Beaumont estate. It included appointment-led customer engagement, consultative sales and high hospitality standards including curated F&B experiences. We believe the customer experience during the purchase journey gives buyers an early indication of the service standards and living experience we aim to provide after possession as well. Fourthly, and most importantly, the success also allays some concerns over AI-led job disruptions in Bangalore. The disruption, we believe, is more a phenomenon at the entry level jobs, which pay around 5 to 6 lo lakhs per annum salaries, a segment which is not our customers. Most of our target segments in this project are more of those who have household income of about 50 lakhs and are probably are net gainers of the AI-led productivity gain and are actually a very, very confident cohort. The success of Beaumont estate gives us further confidence in the premium positioning that we've been building in Bangalore over the last few years. More importantly, the depth of demand across ticket sizes including at the upper end of the project, reinforces our belief that there is a meaningful and growing customer base for a differentiated, premium and luxury housing in the city of Bangalore. Looking at forward, over the past few years, we've steadily established Lodha as an aspirational, premium developer in Bangalore and Beaumont estate launch reflects this. As we scale, we will keep our focus on premium, luxury projects and on delivering exemplary customer experience and product across all our projects. We continue to actively evaluate land parcels which align with these criteria to build a healthy project pipeline. The high growth north, east and southeast Bangalore corridors remain a priority, and we continue to explore opportunities closer to the city as well.
Rajendra Joshi (Lodha Developers Ltd): Over the longer period, we want to become a meaningful player in the city and see ourselves having a mid-teen market share. From a people's standpoint, we have scaled significantly from starting up in 2023 to about 350 plus people across all functions. We expect this number to grow significantly over the next year, especially in operations, in line with our growth ambitions. As always, we will continue to leverage support from our head office which has a strong people base who support us in every of our functions, while depending on a strong core team in Bangalore to lead and deliver. Thank you.
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