The outlook on the ratings has been changed to positive from stable.
The rating action follows the completion of Macrotech’ initial public offering (IPO) and listing on the Indian stock exchanges on 19 April.
“The affirmation of Macrotech’s Caa1 ratings and change in outlook to positive reflects our view that proceeds from
the recently concluded IPO and other management initiatives can eventually improve the developer’s liquidity, which could then support a higher rating despite pandemic-related operating challenges,” said Sweta Patodia, a
Moody’s Analyst.
“Successful completion of the IPO has broadened the funding base for the company. The IPO and conclusion
of the inventory financing at Grosvenor Square, one of the company’s projects in London, in November 2020,
also demonstrate MDL’s improved financial management,” Patodia added.
Macrotech, erstwhile Lodha Developers, raised around Rs 2,400 crore from its recent equity offering, of which almost 80% of the proceeds will be applied towards debt reduction. The management is currently in the process of identifying specific tranches of debt that will be repaid from the IPO proceeds.
MDL expects to receive around Rs 1,500 crore by way of repayment of loans made to the promoter over the next 3-6 months.
The company expects to receive another $150 million-$250 million as proceeds from land sales and monetization of commercial assets by March 2022. The management intends to use most of these proceeds towards debt reduction.
Macrotech, as of 31 March 2021, had around Rs 6,000 crore of debt maturities at its India operations over the next 24 months.
The developer’s liquidity could improve significantly following the completion of these transactions even if its operating performance were to weaken, Moody’s said.
MDL also has around $60 million of debt maturing at Lincoln Square, one of its project in London, by March 2022. The company intends to service this debt out of fresh sales made at the project. As of 31 March 2021, the company had 121 million pounds of unsold inventory in the project.
Remote working, low interest rates and government tax incentives will keep housing demand in India buoyant
over the next 12-18 months. This trend bodes well for real-estate developers such as MDL.
A virus resurgence in India, especially in MDL’s main operating market Maharashtra, has led to fresh lockdowns in the region. This could affect the company’s operating sales and collections over the next few months.
MDL’s operating performance in London also continues to be subdued because of pandemic-related disruptions.
