Lodha Group has reaffirmed its annual sales target of ₹24,000 crore despite a soft start in the April-June quarter. The company strategically delayed new project launches to match the upcoming festive season demand. Investors should note that while residential sales saw a dip in the first quarter, the company recorded strong financial growth, supported by plans to expand its data center business.
Detailed Coverage
Macrotech Developers, widely known as Lodha Group, has confirmed its commitment to reaching a pre-sales target of ₹24,000 crore for the 2026-27 financial year. Finance Director Sushil Kumar Modi explained that the company intentionally held back on launching new projects during the first quarter to better time these releases with the festive season, when buyer activity typically rises.
Financial Performance and Sales Strategy
While the company reported a 24% year-on-year drop in residential sales for the April-June quarter, its broader financial performance remained strong. The company reported revenue of approximately ₹5,000 crore, marking a 43% increase compared to the previous year. Operating profit, measured as EBITDA, grew by 79% to reach ₹2,150 crore, and net profit doubled to roughly ₹1,370 crore. New project launches usually contribute about 30% of the firm's total sales, making the timing of these releases a critical factor for the remainder of the year. Following a project launch in Bengaluru this July, the company is now focusing on maintaining momentum across its key markets.
Data Center Expansion and Annuity Income
Beyond residential development, Lodha is aggressively scaling its data center business, which it views as a major source of future recurring income. The company is developing a one-gigawatt capacity data center on its land bank in Palava, Navi Mumbai. Management projects that this segment will help increase the company's annual annuity income from the current ₹300 crore to over ₹3,000 crore within the next six years. Data centers are expected to account for roughly two-thirds of this projected income, offering a yield-to-cost ratio of 11% to 13%, which is notably higher than returns typically seen in standard commercial or residential real estate. A recent land transaction for a data center in Palava, which was valued at double the price of a previous deal, highlights the growing demand for such assets in the region.
Pricing and Operational Considerations
To manage a balance between property value growth and buyer affordability, the company plans to target annual price increases of 5% to 7%. This strategy is designed to keep projects attractive in a competitive market while allowing for inflationary adjustments. Addressing operational concerns, management noted that construction work remains unaffected by potential water restrictions, as the company utilizes recycled water for its development sites. Investors should continue to monitor the progress of new project launches in the coming quarters and watch for updates on the commissioning timeline of the Palava data center project, as these will be central to meeting the company's long-term growth and annuity income targets.