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Nomura cuts Macrotech Developers target to INR1,450; Keeps Buy

Published 28/01/2025, 06:28
Nomura cuts Macrotech Developers target to INR1,450; Keeps Buy
LODH
-1.92%

On Tuesday, Nomura/Instinet adjusted its outlook on Macrotech Developers (NSE:MACE) Limited (LODHA:IN), reducing the price target to INR1,450 from the previous INR1,600. Despite the adjustment, the firm maintained a Buy rating on the company's stock.

The revision comes as Macrotech Developers' shares have seen an 18% decline year-to-date, which is notable compared to the broader market metrics, with NIFTY down 4% and other real estate players like Godrej Properties (NSE:GODR), Oberoi Realty (NSE:OEBO), and Prestige Estate experiencing declines of 25%, 26%, and 25% respectively. The downward trend reflects broader market concerns about a decelerating real estate sector within a slowing economy.

Nomura/Instinet remains positive on the demand for real estate, particularly for Grade-A developers. However, the firm acknowledges the challenges in forecasting long-term price growth due to an anticipated increase in supply and broader macroeconomic headwinds. The price target reduction from INR1,600 to INR1,450 is primarily attributed to a lowered premium on the residential net asset value (NAV), which has shifted from approximately 110% to about 75%.

Despite the revised price target, Nomura/Instinet reaffirms its Buy rating for Macrotech Developers. The firm's optimism is based on several factors: the company's likelihood to meet its pre-sales targets due to the granular nature of its sales, observed volume and price growth in the key Palava land parcel, and the potential for the company to surpass its business development goals thanks to strong operating cash flow and low net debt.

The main risk identified by Nomura/Instinet is the potential slowdown in the Indian Residential cycle, which could impact Macrotech Developers' performance. Nonetheless, the firm's current stance reflects confidence in the company's resilience and growth prospects within the real estate sector.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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