Macrotech shares rally 5% as Nomura initiates coverage, sees 30% upside

The global brokerage firm is positive on the stock’s future prospects given its solid earnings visibility with right capital- allocation strategies as the company expects pre-sales growth at 20% CAGR over FY25-26.

Additionally, the company has ample potential to exceed business development (BD) goals to maintain future growth, thanks to strong operating cash flow (OCF) generation and relatively low net debt. The company is targeting an embedded ROE on projects to grow to 20% by FY26F.

“We think the company’s township business (in the extended eastern suburbs of Palava and Thane) is due for rerating on volume growth as the region will likely see roughly one infrastructure upgrade per year going forward and price growth driven by the company’s strategy on premiumization,” said Nomura in its note.

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Nomura further believes that Macrotech has visible triggers for a rerating in the future.

The company’s strong and visible sales growth outlook can also be seen as the company executes its ‘supermarket’ and asset-light Joint Development Agreement (JDA)-focussed strategies to grow and expand within the Mumbai Metropolitan Region (MMR) (such as Western and Eastern suburbs) and into cities such as Pune and Bangalore.

In the last one year, the shares of Macrotech Developers have increased by 61.8% while in the current year so far, the stock has gained 22.35%.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)