Lodha Developers’ Macrotech IPO listing day strategy: Weak subscription disappoints; sell or hold shares?

Lodha Developers group company Macrotech IPO was the first public issue of the new fiscal 2021-22 and it will list amid the second wave of COVID-19 concerns.

Macrotech Developers Ltd’s, erstwhile Lodha Developers, which recently raised Rs 2,500 crore through initial public offering (IPO), on Friday informed that it will list its equity shares on stock exchanges on Monday, April 19, 2021. The issue was sold from April 7-9, in the price band of Rs 483-486 per share. The public issue received a lukewarm response from investors and was subscribed 1.36 times. The reserved portion of qualified institutional buyers (QIBs) was subscribed 3.05 times and that of non-institutional investors subscribed 1.44 times. While the portion set aside for retail individual investors saw a subscription of 40 per cent and employees 17 per cent.

The issue looked unattractive from the very beginning owing to its high indebtedness. The burdensome balance sheet makes investors wary. “I am expecting a discount listing. The issue may list in the range of Rs 470-490 per share. In my personal opinion, risk-averse investors can look to exit from the stock as other decent options are available in this space,” Abhay Doshi, Founder, UnlistedArena.com, dealing in Pre-IPO & Unlisted Shares, told Financial Express Online.

This was the third time when the realty developer came up with an initial public offer. Previously, in September 2009, the Lodha Developers had tried to raise Rs 2,800 crore and later in 2018. However, the global recession forced it to shelve the IPO in 2009, while it retreated in 2018 due to adverse conditions in the sector. “Currently, looking at the recent listings it is always better to book listing gains and wait for the next opportunity,” Vishal Wagh, Head of Research, Bonanza Portfolio Ltd, told Financial Express Online.

Lodha Developers group company Macrotech IPO was the first public issue of the new fiscal 2021-22 and it will list amid the second wave of COVID-19 concerns. Even as the company has a strong presence in Mumbai Metro regions (MMR), Macrotech Developers’ debt is a major cause of concern. Citing expensive valuations and high debt, Aditya Kondawar, Founder, COO, JST Investments, had given an ‘avoid’ rating on the Lodha IPO. “We feel there are other listed players that are available with minimal debt which can be looked at,” Kondawar told Financial Express Online.

The company commenced operations in Mumbai, developing affordable housing projects in the suburbs of Mumbai, and later diversified into other segments and regions in the MMR and Pune. As of December 31, 2020, it has completed 91 projects comprising approximately 77.22 million square feet of developable area.

(The recommendations in this story are by the respective research and brokerage firm. Financial Express Online does not bear any responsibility for their investment advice. Please consult your investment advisor before investing.)