Macrotech on an Aggressive Debt Cutting Spree

Macrotech Developers, better known for its Lodha brand of properties, has embarked on a major debt reduction program. It may be recollected that when Macrotech came out with its IPO in April 2021, one of its major focus areas was to cut down on debt. That is expected to give the company more operating freedom to grow.

One of the commitments in the Macrotech IPO prospectus was to sharply cut down on the total debt. Accordingly, in the Jun-21 quarter, Macrotech cut its total debt from Rs.16,076 crore to Rs.12,435 crore. Now, Macrotech is looking to further pare its total outstanding debt to a level of Rs.10,000 crore. How does it propose to do so?

In the current year, the debt reduction will be largely funded through collections. In the Sep-21 quarter, it clocked sales of Rs.3,453 crore which includes Rs.2,003 crore from the India business and Rs.1,450 crore from London’s Grosvenor Square and Lincoln Square projects. Macrotech is planning pre-sales of Rs.9,000 crore in FY22.

For the Sep-21 quarter, the total collections were Rs.1,912 crore. This will be used to reduce the debt from the current Rs.12,508 crore to Rs.10,000 crore. Apart from these regular sales flows, debt reduction will also be managed through sale of non-core assets like warehousing assets and commercial rental assets, which are not central to the Macrotech model.

For the full year FY22, out of the total pre-sales of Rs.9,000 crore projected, Macrotech expects Rs.8,000 crore from the sale of homes and the balance Rs.1,000 crore from the monetization of assets. This monetization is expected to pick up steam in the second half of the fiscal year FY22.

In FY22, Macrotech has already launched five projects across Mumbai and Pune with total saleable area of 4 million SFT. In addition, the company has a steady pipeline and plans to launch another 4.5 million SFT worth of projects in the remaining six months of the current fiscal year FY22. 

Home sales have got a big boost post-COVID with the Jan-Aug period seeing sales grow 3-fold. Macrotech also expects to see sharp sales growth from the festive season which runs from October to December and is a busy month for property purchases.