25% upside? Why Sharekhan is bullish on Mahindra Lifespace Developers shares

Mahindra Lifespace Developers, whose shares have recovered 70 per cent from 52-week low of Rs 364, is in focus following the company’s Q4 results.  

Mahindra Lifespace Developers reported a fall in net profit at Rs 97.89 crore for the March quarter  from Rs 101.43 crore in the same quarter last year. Its total income fell to Rs 279.12 crore from Rs 659.56 crore.

Despite this, Sharekhan retained its 'Buy' rating on the stock with a revised price target of Rs 785, increasing its NAV valuation, factoring in higher pre-sales run-rate and recently launched projects.

"Mahindra Lifespace has achieved strong momentum in residential sales which is expected to sustain in the near term, while its industrial leasing business, although lumpy, has started to gain traction. The company remains on a solid growth trajectory with a vision to multiply manifold over the next four years, focusing on MMR, Pune, and Bangalore markets. It has a strong launch and business development pipeline for the next two years," it said.

The residential market is expected to be in the spotlight, as it benefits from the Centre’s and State governments’ favourable policies on the affordable housing segment.

"Rising income levels and affordability levels are expected to drive sales for quality organised developers, who are also expected to benefit from ample inorganic opportunities in the sector. The sector is also expected to benefit from low interest rates, which provide the twin benefits of driving demand and reducing funding costs," it added.

Sharekhan said Mahindra Lifespace benefits of China Plus One, apart from the government’s increasing focus on attracting manufacturing investment in the country, led by Atmanirbhar Bharat Abhiyan and production-linked incentive schemes for its IC&IC vertical.

Recently, Mahindra Lifespace Developers acquired 9.4 acres of land at Whitefield, Bengaluru. The company in a press statement said the land will have 1.2 million square feet of FSI potential and a gross development value of Rs 1,700 crore. It will primarily comprise mid-premium residential apartments.