Up 130% in a year! ICICI Securities still bullish on this multibagger; here's why

Brokerage house ICICI Securities has a 'Buy' rating on the Mahindra Lifespaces Developers Limited stock with a target price of Rs 430 per share. The stock jumped 3 per cent to hit an intraday high of Rs 382 on BSE on Friday.

Shares of the real estate arm of the Mumbai-based Mahindra Group have already delivered multibagger returns to its shareholders. In the past one year, the share price jumped from Rs 166.9 to Rs 382, logging around 130 per cent return in this period.

The scrip opened higher at Rs 374 against the previous close of Rs 369.80. With a market capitalisation of Rs 5,870 crore, the shares stand higher than 5 day, 20 day, 50 day, 100 day and 200 day moving averages.

"On the costs front, the company has seen a 12-15 per cent increase in construction costs in FY22 which have been mitigated through price hikes of 4-14 per cent across projects. Going forward, the company will be prudent in launching new phases considering that costs are estimated to go up further," noted ICICI Securities.

"Heading into FY23E, the company has added new projects across MMR and Pune having a Gross Development Value (GDV) of Rs 55 billion between Apr’21 to Apr’22. With this, the stage is now set for MLIFE to grow its sales by 2-3x over FY22-25E (Rs10.3bn of bookings achieved in FY22) subject to approvals for these projects coming through," it added.

"We reiterate our BUY rating on the stock with a revised Mar’22E DCF-based target price of Rs 430 per share (earlier: Rs381) as we include value of new Pimpri, Pune land and retain our 40 per cent premium to FY22 NAV of Rs307/share considering the company’s strong business development pipeline," ICICI Securities said in its recent report.

Key risks to our rating are demand slowdown in the Indian residential market and rising interest rates in India, it said.

The company reported a net profit of Rs 136.8 for the quarter ended March 2022, up 602 per cent from a net profit of Rs 27 crore in March 2021. Net Sales came in at Rs 162 crore in March 2022 up 188.91 per cent from Rs. 56 crore in March 2021.

Mahindra Lifespaces’ development portfolio comprises premium residential projects, value homes under the Mahindra Happiness brand and integrated cities and industrial clusters under Mahindra World City and Origins by Mahindra brands, respectively.