Macrotech Developers Ltd Management Discussions

In CY24, despite the concerns around weak economic growth and inflationary pressures, the global economy has held steady, although the grip varies across geographies and countries.

According to the International Monetary Fund, the global economy grew at 3.2% in CY24 and is expected to continue the growth momentum with growth projected at 3.3% in CY25 as well as CY26. However, that is still below the long-term average of 3.7% achieved in the first two decades of this millennium. Dark clouds of tariff tensions, primarily originating from the USA, are currently casting a shadow over the global economic landscape, creating uncertainty and potential headwinds for growth and stability. Tariffs imposed by the USA on all their trading partners coupled with counter-tariffs levied by China as well as few other countries on the USA has muddied the global growth forecasts. Failure to resolve these trade disputes swiftly could significantly impede global growth through dislocations in global trade.

Led by Covid period pump-priming of the economies in various countries, inflation had been a persistent challenge throughout CY22 and CY23. In CY24, the inflation descended from its mid CY22 peak, largely due to the efforts of the central banks. Average global headline inflation fell from 6.8% in CY23 to 5.9% in CY24. It is further projected to decline to 4.2% in CY25 and 3.5% in CY26, as per IMF estimates. While on a global level, disinflation continues, there are signs of elevated inflation in a few countries. In countries where inflation remains persistently high, central banks are moving more cautiously in the easing cycle while keeping a close eye on economic activity, labour market indicators and exchange rate movements. Tariff related distortions could also raise the fear of stagflation given the impact on growth and also drive up the cost of manufactured goods.

Equities in most major economies in CY25 thus far have largely mirrored the direction of trade policies emanating from the United States, particularly after the US presidential election. This policy led uncertainty in the markets is going to have an impact on the global capital flows and currencies. In general, equity valuations have become more subdued and a broad-based strengthening of the US dollar, driven primarily by expectations of higher tariffs and higher interest rates in the United States, has kept financial conditions tighter.

The geopolitical landscape in CY24 remained volatile. The wars in Ukraine and in the Middle East continued to have significant impacts on global energy markets, food prices and supply chains. Brent Crude oil prices averaged US$85 per barrel in CY24, compared to US$82 in CY23, according to the International Energy Agency. Additionally, tensions between major economies like the US, China and Russia continue to influence global trade and economic stability.

Energy prices in the near future are going to remain volatile as economies grapple with tariff related uncertainties and prolonged wars in Middle East and Europe.

The Indian economy is projected to grow by 6.5% in FY26, which is close to the 6.4% growth seen in FY25 as well as the decadal average, but lower than the 8.2% growth that the economy clocked in FY24. The retail inflation has softened from 5.4% in FY24 to 4.9% in FY25.

At the same time, the banking sector remains robust with declining asset impairments, well capitalised balance sheets and strong operational performance. As of September 2024, scheduled commercial banks demonstrated robust asset quality with Gross Non-Performing Assets falling to a 12-year low of 2.6% of gross loans and advances. Their Capital to Risk Weighted Assets Ratio (CRAR) stood strong at 16.7%, significantly above the norms.

As a result of stable capital flows, Indias foreign exchange reserves increased from US$ 616.7 Bn at the end of January 2024 to US$ 704.9 Bn in September 2024 before moderating to US$ 676.3 Bn in March 2025. Indias forex reserves are sufficient to cover 90% of external debt and provide an import cover of nearly a year, thereby safeguarding against external vulnerabilities.

Selling pressure from FPIs has led to a sharp correction in the benchmark indices and broader markets. The rupee has depreciated in line with other emerging market currencies, influenced by the US$ strengthening. The latest round of tariffs imposed by the USA, a significant trading partner for India are anticipated to negatively affect Indias economic growth, largely on account of uncertainties in global trade and growth. India however is better placed than most other economies due to its large domestic economy with low dependence on exports. Additionally, Indian policy makers have been proactive in discussing a potential bilateral trade deal with the USA thus mitigating the impact of tariffs to a large extent in a shorter time frame. It also presents an opportunity for India as global manufacturers increasingly seek to diversify their sourcing away from other economies like China.

Despite the challenges, Indias strong macroeconomic fundamentals and improvements in external sector indicators have helped it navigate global uncertainties. RBI expects the economy to grow around 6.5% in FY26. The union budget for FY26 has prudently balanced fiscal consolidation with growth objectives. Its emphasis on capital expenditure is complemented by measures aimed at boosting household incomes and consumption. Key indicators like higher tractor sales, rising farm incomes, increased fuel consumption, growth in air passenger traffic suggests recovery in economic momentum.

As a service driven economy with a young workforce, adoption of AI offers the potential to support economic growth and improve labour market outcomes. Prioritising education and skill development will be crucial to equipping workers with the competencies needed to thrive in an AI-augmented landscape.

In May 2025, the geopolitical landscape in South Asia experienced renewed volatility due to a brief but significant military escalation between India and Pakistan. Triggered by cross-border incidents along the Line of Control and the International Border, the conflict led to a series of military responses, which, while contained diplomatically within a few weeks, marked a significant escalation in a historically volatile relationship between the two countries.

The escalation resulted in short-term market disruptions. Key indices, including the Nifty 50, declined by over 4% in the immediate aftermath, accompanied by increased currency volatility. Foreign Institutional Investors reduced their exposure to Indian equities during this period, citing regional risk aversion. However, such concerns were short lived and the markets seems to have moved beyond the short- term conflict.

The episode underlines the need for India to build a resilient economy, capable of withstanding external shocks and a nimble diplomatic strategy to maintain its regional and global ascent.

While our Company does not have direct presence in conflict zones and our business operations remained uninterrupted, we continue to monitor regional developments closely and assess their potential second-order impacts on capital markets, consumer sentiment and investor confidence.

While such conflicts introduce a layer of uncertainty, we are confident in the structural resilience of the Indian economy and its capacity to navigate short-term shocks while staying on course for long-term growth.

To accelerate Indias growth, the Government must prioritize a return to significant capital expenditure and increased funding for crucial infrastructure projects, while actively driving states to improve their utilization of allocated resources. The Government must continue to invest in addressing skill gaps, particularly in industry-relevant professional skills to ensure a future-ready workforce and a robust pipeline of talent.

Despite all the external and internal roadblocks in CY24, including inflation, general elections and geopolitical tensions, India continues to be one of the fastest growing major economies in the world. The Indian real estate sector has shown robust growth since the pandemic. While initial recovery saw a surge in housing sales, commercial leasing has also gained significant traction over the past year. Hospitality sector continues to do exceedingly well with average daily rates at an all-time high. As India moves from being a low-income to a middle-income country, household incomes and spending will continue to rise giving a long runway for growth in the real estate sector. Real estate will continue being a driver of growth and employment and will continue to take larger share of the countrys GDP, as is the case in other more developed and advanced economies.

A large and growing population, strong economy, high single digit wage growth and urbanization trends are expected to drive demand for housing in the years to come. There is a visible shift in customer preferences towards more branded developers, recognizing the importance of execution capability. Reforms over the last decade along with learnings from the past, for both developers as well as home buyers continue to foster a more rational and stable real estate market. As wages grow, home buyers will continue to become more discerning in their choices and will want better quality developments.

Overall, the residential market across the top Indian cities is entering a phase of greater maturity, characterized by more measured growth, increased competition among branded developers and a focus on timely execution, quality of construction and affordability for the home buyer.

Despite fewer launches in FY25, as compared to FY24, due to the general elections, the value of housing sales has surged from H 4.9 Tn in FY25 to H 5.7 Tn in FY25 (Source- Anarock). Due to constrained supply addition because of general elections, rising input costs and growing preference for premium housing, the prices per housing unit have escalated by a faster rate in CY24, as compared to any other year in the last 4 years. The market demonstrated improved absorption, with the inventory overhang reducing from 15 months at the close of CY23 to a healthier 14 months by the end of CY24.

In developed economies, housing is a cyclical industry since over time the supply tends to overshoot the demand. As India continues on its growth path to becoming a middle-income country, the demand for housing is going to be huge, as more households become home ownership capable. The challenge will be on the supply side to scale and deliver as per the rising demand. We risk a scenario where price appreciation outstrips wage growth, eventually pushing demand to the brink. With the increasing consolidation in the housing space, organized developers wield greater power over pricing and thus bear a greater responsibility to ensure calibrated price growth. It is this combination of steady volume growth, calibrated price growth and focus on execution and timely delivery is required to ensure that housing in India remains a long-term structural play.

Going forward, interest rates are projected to go down and along with the tax stimulus given to the middle class in the Union Budget, we expect an uptick in the entry level and mid-income housing, which had been severely impacted by higher interest rates in the last 3 years. FY26 looks to be promising, with demand expected to remain robust across segments.

MMR Housing Market

MMR continues to be the largest market among the top 7 cities in India accounting for 32.6% of new launches and 33.8% of offtake in CY24. MMR witnessed launch of 1,34,500 housing units and absorption of 1,55,300 housing units; this divergence between offtake and new supply addition could largely be attributed to the fact that Maharashtra saw two elections in CY24. In CY24, offtake exceeded supply, resulting in a reduction of inventory levels to 14 months, down from 16 months in CY23.

MMR housing will be the beneficiary of the significant infrastructure development being carried out in the city. Key infrastructure projects delivered in the last 12-15 months include, the Atal Setu (Mumbai Trans Harbour Link), Coastal Road and a few metro lines. CY25 is also going to see completion of more such large infrastructure projects such as the new airport, Mulund Airoli Palava freeway, more metro lines etc. These developments will improve city connectivity, ease capacity issues and attract more jobs, thereby boosting housing demand.

Peripheral central suburbs dominated both launches and sales, taking a 25% and 26% share respectively in the total MMR market. The market share of peripheral locations is expected to increase further in the coming years, because of three factors. First, the limited availability of land and high land prices will continue to push developers to peripheral locations. Second, as connectivity improves, these peripheral locations with lower home prices, more open spaces and larger unit sizes, will appeal more to home buyers. Third, the anticipated decrease in interest rates, coupled with tax benefits, is expected to spur a surge in demand within the affordable and middle-income segments in CY25, with peripheral suburbs poised to be the primary beneficiaries of such uptick.

Pune Housing Market

Similar to MMR, because of the general and state elections, Pune saw a significant gap between new launches (60,500 units) and sales (81,100 units). Inventory level has come down from 14 months to 12 months, at the end of CY24 as housing demand continues to outpace supply.

North Pune emerged as the most dominant zone taking a 36% share in new launches and 39% share in sales offtake in CY24.

The presence of a diverse range of employers in Pune, including key industries like IT, automobiles, defence, engineered goods and manufacturing, provides the city with a broad and resilient base of potential homebuyers. This diversification ensures a more predictable housing demand, less susceptible to the cyclical ups and downs of individual sectors. With increasing wages, the nature of demand in Pune is slowly but steadily shifting to higher priced housing units. The market share of the mid segment housing (H 4 Mn to H 8 Mn) has come down from 57% in CY21 to 42% in CY24. Conversely, the high-end segment (H 8 Mn to H 15 Mn) has increased market share from 17% in CY21 to 31% in CY24. This trend is a validation of the strong economic growth prospects of the city and the increasingly discerning nature of lifestyle upgrade expected by its residents.

Bengaluru Housing Market

Bengaluru housing market witnessed launch and absorption of 71,000 and 65,200 units respectively in CY24. East Bengaluru accounted for 48% of new launches and 50% of absorption. Further, the share of luxury segment (H 15 Mn +) has increased to 34% in CY24 as opposed to 23% in CY23. Two primary factors have fueled this shift in demand. Firstly, Bengaluru has the most vibrant start-up ecosystem in the country, which has resulted in huge wealth creation for founders, CXOs and senior executives, the key demographic for luxury homes and secondly, a post- covid shift in general preference for larger homes and developments with more amenities for recreation and leisure. We expect these trends to continue going forward as well.

As the IT sector recovers, we expect the housing demand in Bengaluru to remain robust. The city continues to lead in office leasing among the top 7 cities in India with more than 20% Grade A office stock being absorbed within the city. We anticipate development of newer micro-markets along upcoming metro corridors, particularly in North Bengaluru. As GCCs continue to prefer Bengaluru to setup and expand their existing office capacity in the country, the influx of educated talent into Bengaluru will continue and will keep rental yields higher than the other cities in the country, which in turn will fuel housing demand.

Opportunities

Because housing has been in a secular uptrend over the last 4 years, there are concerns of this being the peak of the cycle and demand softening going forward. Notwithstanding this, the reality remains Indias dire need for quality housing and low home ownership capability levels. As wages continue to grow and home ownership capability emerges in more households, housing demand will keep unfolding. It is our belief that we are only in the early stages of a multi decade housing upcycle.

Resurgence of the mid-income housing segment

The high interest rate regime of the last 2-3 years, restricted the ability of a significant part of entry level and mid-income housing demand to convert into actual home buying. As we enter a benign home loan interest rate regime, increased home loan eligibilities and and and reduced upfront equity requirements, will enable a substantial number of households to consummate their home purchase. Further, the government has taken the initiative by putting more money into the hands of the tax payer, through tax rebates announced in the Union Budget. Higher household savings will likely fuel home purchases in the affordable and mid-income segments, while also driving increased residential real estate rentals as people seek better and larger living spaces, leading to greater upgrade demand from existing homeowners.

Structural nature of housing in India

Housing globally is cyclical in nature with a typical cycle not being longer than 5-6 years. While one might expect India to follow a similar trend, the Indian housing market demonstrates more structural characteristics than cyclical, due to the following reasons:

Rising household incomes and emergence of the home ownership capability: As the per capita incomes move from US$ 2,000 to US$ 5,000 during the decade, the number of home ownership capable households will increase from H 77 Mn to H175 Mn.

Real estate being a driver of GDP growth: In India, real estate contributes ~ 7% to the countrys GDP. This is considerably lower as compared to developed economies, where it averages around 15% and China, where it is about 21%. While short term shocks on account of interest rates and commodity prices will invariably occur, because of the reforms of the past decade (RERA, demonetisation, GST, stricter regulations on lending practices of Banks/NBFCs), the supply side excesses are behind us. This presents a clear and unobstructed runway for the structural nature of Indian housing, fully positioning real estate not only as a beneficiary but as a driver of economic growth.

Greater urbanisation and nuclearisation of families:

These are secular trends which have played out in every country which has moved from a low income to a middle-income country. The pursuit of better employment prospects will continue to drive the salaried population from smaller towns towards urban centers. This ongoing migration and the resulting influx of people into cities will be a key driver of home purchases in these urban areas.

Our Company, by virtue of being one of the largest real estate developers in the country, will be a beneficiary of the above trends unfolding over time.

Supply and demand consolidation

Previously, housing in India was considered a relatively standardised product, where access to factors of production were considered as the primary prerequisites for development. Consequently, homebuyers did not necessarily differentiate between developers based on their track records. The negative experiences of the past decade have changed the mindset of home buyers, with todays home buyer only willing to buy from a branded developer, even at a premium, as long as the price is within budget and there is adequate supply in from branded developers in their preferred micro market.

The past decade saw banks and NBFCs incur substantial financial losses due to their willingness to lend to unbranded developers without established execution capabilities. It has taken half a decade for the lenders balance sheets to recover from those losses and lenders now place much more emphasis on the demonstrated delivery track record of developers before extending loans.

The drying up of capital from both homebuyers and lenders has resulted in a significant number of smaller developers either transitioning to land ownership roles or exiting the real estate development sector altogether.

The above factors have led to significant consolidation, both on the demand as well as on the supply side and today buyers, lenders, land owners are all much more aligned to dealing only with branded developers.

This consolidation has also altered the balance of power between landowners and developers. Strong, branded developers now possess greater negotiating leverage when acquiring new land for further expansion.

By virtue of our strong brand and proven delivery track record, we are well positioned to achieve predictable growth in pre-sales, while also being a partner of choice for land owners seeking to to develop their land through the JDA partnership mode. This adds both profitability and scalability to our business model.

New markets to propel growth

The demand and supply side consolidation has been observed across each of the top 8 cities in India. Even so, there are markets where there are insufficient Grade A branded developers to force such consolidation and hence, in order to fulfil their home owning aspirations, homebuyers have no choice but to settle for unbranded developers or to defer their home buying for a few years.

We follow a conscious approach of entering new markets in a calibrated manner. Over the past few years, we have expanded our presence in various micro markets within MMR and Pune and have also entered the Bengaluru market. Having successfully tested the Bengaluru market, we are now entering into a growth phase. While scaling our operations, we remain firmly focused on maintaining high product quality and ensuring timely deliveries. We will continue to evaluate further expansion opportunities in a measured manner in other cities as well as micro markets within MMR, Pune and Bengaluru.

Threats and Challenges

While we are favorably positioned to capitalize on the growth prospects within the Indian real estate sector, there are potential challenges that the industry might need to navigate in the near to medium term.

• Increase in housing prices greater than wage growth

• Economic slowdown for an extended period

• Disruptions in job creation because of artificial intelligence making certain roles redundant

• Job creation not keeping pace with the aspirations of the skilled workforce

• Geopolitical risks causing shocks in commodity prices and supply-side disruption

• High interest rates, affecting purchasing power of the middle class

The management actively monitors potential trends in the external environment and remains agile in implementing strategies to mitigate any emerging risks.

Strengths

As one of Indias largest and most valuable real estate developers, our Company boasts a legacy of over four decades in delivering the worlds finest developments. Lodha is synonymous with luxury and is perceived as a lifestyle upgrade in all segments. While residential real estate has been and will continue to be our core business, we are also expanding our footprint in digital infrastructure and facilities management businesses. Over decades we have built unique strengths which differentiate us from other developers. Some of these strengths are as follows:

Trusted and aspirational consumer brand

• Brand Lodha is associated with providing a luxurious lifestyle and is a name that buyers aspire for.

• The brand is a partner of choice for land owners as well as home buyers, giving us an advantage on both, demand and supply side.

• The strength of our brand is reflected in the fact that 20% of our sales are either repeat customers or through referrals.

• Our brand strength allows us to command premium pricing as compared to the market, with buyers willing to pay a higher price in recognition of the superior quality of our offerings.

Superior and in-house execution capability

• The Lodha brand has been built upon exceptional track record of delivery, backed by our in-house execution capabilities.

• About 50% of our ~5,414 employees, are dedicated to construction and design related functions.

• Our superior in-house execution capabilities enable us to deliver high-quality developments, while also maintaining cost-effectiveness by eliminating margin leakage to external general contractors.

Granularity in portfolio

• We are the only developer at scale, demonstrating capability to sell a H 5 Mn home as well as a H 1 Bn home & beyond at scale, while maintaining profitability.

• We are not dependent on any particular project, micro market or city. Our pre sales of H 176 Bn in FY25 were delivered from ~40 locations across 3 cities of MMR, Pune and Bengaluru and from multiple micro markets and various non- competing project locations within those micro markets.

• Such diversification makes us immune to any potential downside that any one project location, micro market or even a city may witness and enables us to deliver consistent pre- sales growth.

Ability to acquire land

• A strategic shift from exclusively developing on owned land four years ago has led to a balanced portfolio comprising both owned land and JDA projects. This allows us to expand our footprint, while maintaining a healthy balance sheet.

• Our superior execution capabilities position us as a preferred developer for landowners, as we provide predictability in the revenue they can expect from monetizing their land.

Decentralised Management

• Our experience shows that the housing market in every city is unique and demands a distinct approach. From the permitting ecosystem to consumer behavior, market practices vary significantly not only between cities but often even between micro-markets within the same city.

• It is our belief that real estate is a product where consumer behaviour may vary significantly from one market to the other.

• Upon entering a new geography, we build an independent operational capability within that geography to run the business as an independent unit. This helps us achieve better results in the near term and also paves the way for us to achieve the long-term objective of achieving scale in whichever geography that we enter.

Strategies

Our medium-term objective is to deliver 20% CAGR in pre-sales growth, 20% RoE and keep the leverage level lower than 0.5x Net Debt/ Equity. The following strategies will enable us to achieve these objectives:

Expansion strategy largely led by capital light JDA projects

Land is the most critical raw material for the real estate sector and securing essential raw materials is paramount for sustained growth. At the time of our IPO, all our projects were on owned lands which inherently present a lower RoE profile. We reaffirm our commitment to consistently deliver a 20% RoE. This will be driven by an optimum mix of JDA projects within our portfolio. Our aim is to generate approximately 40% of our pre-sales from JDA projects. Given that we already own sizeable land parcels, our business development strategy will be heavily tilted towards JDAs. This approach will allow for expansion without undue strain on our balance sheet and ensure continued capital efficiency. Our brand and execution capability are the strongest enablers for the successful implementation of this strategy. An optimum mix of JDA and owned land projects would enable us to achieve our dual objectives of 20% RoE and 20% CAGR in pre-sales.

Expansion into new cities in calibrated manner

Our primary target demographic comprises the urban salaried class residing within the top 8 metropolitan centers in the country. In order to cater to this demand, we intend to gradually expand into a new city every three to four years, after having achieved scale in existing cities. It is likely that continued economic growth and increasing urbanization in India will expand the number of relevant cities for branded developers beyond the current 8.

Recognizing that geographical expansion, while a growth enabler, inherently presents associated risks, we employ a two-phase mitigation strategy where the initial two to three years in any new location will constitute a pilot phase, during which we will focus on understanding the ecosystem, building our brand, network with vendors and channel partners and build capacity to deliver future growth. In the pilot phase we will only do a limited number of projects and prioritize superior customer experience and execution. After the brand is established and we have understood the ecosystem, we will commence a phase of increased land acquisition and capital allocation to the location, so that the location becomes a significant driver of growth, rather than a mere contributor.

Maintain conservative capital structure

We believe that while growth is essential for business advancement, it must not compromise our balance sheet. We will continue to keep our net debt levels at less than 0.5x equity. Low levels of debt provide us with flexibility to capitalize on opportunities that may arise in the future, in the event of an adverse impact of a black swan event or an economic slowdown. It also leaves us room to increase the leverage in a covid - like event, where the sales and collections may cease temporarily, but the obligation to deliver projects continues.

Outsized focus on Palava

We have a large landholding at the outskirts of Mumbai where we are developing Palava - a city scale development. Palava is undergoing a strategic transformation from being a peripheral suburb to a primary suburb of Mumbai, primarily driven by substantial enhancements in connectivity facilitated by the completion of several large-scale infrastructure projects within the next one to five years. Some of the key infrastructure getting completed in the next six to twelve months include the Mulund Airoli Palava freeway and the, Navi Mumbai international airport. Furthermore, the Mumbai- Ahmedabad High-Speed Rail project (with a planned completion in fiscal years 2028-29) includes Palava as its first stop after Bandra Kurla Complex. In addition to this, a metro line and various ongoing road projects are further establishing Palava as the best connected suburb of MMR.

In anticipation of the enhanced connectivity, we are strategically repositioning Palava from a primarily mid-income residential location to a destination attracting diverse asset classes such as mid-income housing, premium & luxury housing, high street retail, schools, hospitals and assets generating economic activity and creating jobs. Enhanced connectivity coupled with emergence of premium housing will augment growth in both sales volumes and blended revenue realisations. Given that land is already paid for there would be substantial boost to the margins for the residential business at Palava with EBITDA margins growing from the current mid-30% levels to closer to 50% by the end of the decade.

Our strategy for generating economic activity within Palava centers on establishment of R&D centers, high value warehousing and light industrial units and data centers which will accelerate value creation through recurring land monetization and residential development. We have already signed two large data center deals with marquee global players. We maintain a robust pipeline of similar opportunities which can generate recurring revenue streams at increasingly favorable pricing terms.

Achieve reasonable market share in each micro-market of the cities where we operate

We currently operate in three metro cities in the country and will continue to expand in a calibrated manner. The economic viability of this expansion is contingent upon our ability to achieve profitability in each new market we enter, which is in turn directly linked to economies of scale playing out in these regions. Prior to our IPO, our operational presence was limited to three of the seven micro-markets within the MMR and a single project in Pune. While the brand always had a pull in all the micro- markets of MMR and in Pune, we have now expanded significantly in both cities adding projects in a non-overlapping and non-competing manner. In Bengaluru, till FY25, we had only two locations. As we transition into the growth phase, we will add new locations deep within the Bengaluru market, which will improve unit level economics of each project by leveraging on existing capacity and channel partners and vendor networks to cater to demand from each new location in the city where brand presence has already been established. This is a strategy that we will continue to follow even in any new cities that we add to our portfolio.

Focus on building annuity income streams with good RoEs

To achieve strategic diversification and mitigate business risks, we are focusing largely on three business segments designed to generate annuity income streams and create shareholder value over the long term.

Logistics and warehousing business

Our strategic initiatives include development of warehousing, logistics, in-city fulfilment centres and light industrial where we are currently developing 5.3 Mn sq. ft. in multiple locations. Our goal is to cater to the digitization of the economy and tap the opportunities arising from the growing share of manufacturing in the Indian economy. This strategy enables us to accelerate monetization of large land parcels in our township projects.

Facilities management with a digital layer

Our residential communities continue to expand, with a growing number of families choosing to reside in Lodha developments. We currently manage ~ 70,000 such homes across our developments. Our long-standing relationship with our customers has enabled us to understand their requirements and their spending patterns. Leveraging these valuable insights, we have launched the Bellevie app, an integrated platform offering a comprehensive suite of services including home improvement solutions and local commerce options, in addition to the existing facilities management services we provide. As we scale up this business, it will generate recurring fee incomes with better RoE. We also anticipate future opportunities to extend this platform to developments by non-competing developers, which will further augment this revenue stream.

Portfolio of select high quality office and retail assets

While our core business is and will remain residential real estate, we also develop retail and office spaces as part of our mixed-use development strategy. Although in the past we have monetized such assets, going forward we will retain select assets to diversify our income stream. These assets will be chosen based on probability of capital appreciation in addition to their rental yield and will be driven by factors such as superior location, product quality and tenant mix. Given that these assets would be developed along with our residential developments on large land parcels suitable for mixed use developments, capital intensity of these projects would be significantly lower and thus can generate strong RoEs.

In FY25, we achieved pre-sales of Rs. 176 Bn, registering a growth of ~ 21% over FY24. 19% of the pre-sales came from launches at new locations, while 4% came from new launches at existing locations and 77% came from sustenance sales. Such a spread allows us to cater to customers who may be willing to buy housing at different stages of construction.

City-wise pre-sales performance

MMR

MMR recorded pre-sales of ~ Rs. 122.9 Bn (13% YoY growth) in FY25. While existing projects such as New Cuffe Parade, Divino, Lodha Malabar, Lodha Park and The World Towers continued to exhibit strong performance, our new launches such as at Juhu and Borivali received strong response. Our strategy of growing in micro markets of MMR where we had limited or no presence before IPO is now beginning to contribute meaningfully to the pre-sales. Western Suburbs, where we had a very limited presence at the time of our IPO, has contributed Rs. 24.2 Bn in the FY25 pre-sales, a more than 10x growth in 4 years. In line with our strategy of being present in all demand centres, we now have projects in Juhu, Versova, Borivali, Kandivali and Andheri in the western suburbs.

Similarly, Eastern Suburbs, where we were not present at the time of the IPO, contributed Rs. 21.8 Bn to the pre-sales in FY25 and we now have operating projects at Matunga, Vikhroli, Powai, Bhandup and Mulund, catering to a significant part of the demand from the Eastern Suburbs.

Pune

From a single project in Pune at the time of our IPO, we now have 10 operating projects across 8 locations in Pune city, which has contributed Rs. 25.2 Bn to the FY25 pre-sales, a growth of 40% from FY24. This strong performance proves that the brand has travelled well to Pune and we will continue to add more locations in the city.

Bengaluru

We have 2 operating locations in Bengaluru, which together contributed ~ Rs. 7.3 Bn to the FY25 pre-sales. All locations have received phenomenol response from customers and as we enter the growth phase in Bengaluru in FY26, we will look to add more locations and gain market share in Bengaluru.

Land Monetisation

In line with our stated strategy of monetizing surplus land assets to generate cash flows, in FY25, we sold land worth ~ Rs. 12 Bn, largely to data centre operators. Development of infrastructure around our township projects has served as a catalyst in attracting marquee corporates to buy land assets from us. This has resulted in nearly an eight-fold price growth since 2021 from H 26 Mn per acre to Rs. 210 Mn per acre. This further adds to the economic ecosystem in and around Palava as it leads to job creation which in turn feeds into the demand creation for our residential business. We aim to generate Rs. 10-12 Bn of cash flow from this segment. Additionally, we have sold land worth Rs. 7 Bn to the Government for development of infrastructure projects.

Completions

In FY 25 we completed 5.3 Mn sq. ft. of inventory, against 5.4 Mn sq. ft. last year. Our construction spends grew from Rs. 36.0 Bn in FY24 to Rs. 42.9 Bn in FY25. Key completions during the year were in our projects Lodha Woods, Lodha Park, Lodha Bella Vita, Lodha Vista, Palava and Upper Thane.

Collections

Our Collections grew 29% YoY to Rs. 145.0 Bn in FY25. Going forward, as we fully transition to a progressive method of revenue recognition, we expect collections to grow at the same pace as pre-sales.

Digital Infrastructure

Our digital infrastructure business is scaling up steadily. Currently we have ~ 5.3 Mn Sq ft under development across various assets and locations, of which ~ 2.1 Mn Sq ft has already been leased out. In FY25, we added two land parcels in NCR and Chennai, where development will begin in FY26.

Business Development

In FY25, we added 10 projects with GDV potential of ~ Rs. 237 Bn through a combination of outright land acquisitions and JDAs. The strength of our brand, coupled with our ability to expedite product launches and our superior execution capabilities has consistently positioned us as a partner of choice, for land owners in MMR and Pune. Following three consecutive successful project launches, the brand is established in Bengaluru as well, which is already helping us attract more land owners for JDAs in that market. We have a robust business development pipeline across MMR, Pune and Bengaluru and will continue to invest in land acquisitions to fuel growth for the next few years.

We are committed to contributing to the enhancement of Indias economic strength and facilitating its progression towards becoming a developed nation. To this end, the promoter family has dedicated 1/5th of the Companys equity capital (US$2.5 Bn as of October 2024) to the Lodha Foundation, reinforcing our belief that business success must drive societal progress. The Foundation embodies the aspirations of 1.5 Bn Indians, ensuring that the nation as a whole will be a partner in and benefit from the growth and success of the Company.

Guided by our Do Good, Do Well philosophy, we recognise that sustainable growth is not just a goal but a responsibility. Every step we take is anchored in ensuring a positive impact on society and the environment. The Foundation is committed to long- term programs and partnerships aimed at contributing to Indias transformation into a developed nation (per capita income of US$15,000+ in 2023 terms, with top quartile performance in global Happiness and Environmental Performance Indices) by 2047.

The Foundation focuses on three key transformative areas for holistic nation-building: Education Excellence & Innovation, Environmental preservation & upgradation and Human development and under area lie focus programmes designed to contribute to Indias progress and benefit millions of Indians.

Further details on our sustainability intiatives and performance are provided in other parts of the Integrated Report.

Results of operations

Select financial data from the consolidated statements of profit and loss for FY25 and FY24.

Cash Flows

Cash flows for the consolidated operations for FY25 and FY24.

Indebtedness

Consolidated indebtedness as of March 31, 2025 and 2024.

Key Financial Ratios

Risks and Mitigants

OUTLOOK

Structural demand drivers and industry dynamics will continue to generate significant housing demand in the foreseeable future. Housing remains a necessity and coupled with the availability of quality supply at affordable price points, we anticipate that this demand will translate into robust pre-sales in the years ahead.

Indias growth trajectory remains robust, supported by ongoing policy reforms, a focus on manufacturing, supply chain diversification away from China and a strong service sector, all of which continue to fuel job creation. Rising wages, positive consumer sentiment and the inherent security associated with homeownership are expected to sustain strong housing demand. Furthermore, anticipated interest rate reductions and government-led tax rebates will provide additional impetus to the affordable and mid-income housing segments.

Branded developers are benefitting disproportionately from the demand and supply side industry consolidation. With our robust brand, strong balance sheet and proven execution capabilities, we are well-positioned to achieve our target of 20% pre-sales growth, alongside a 20% RoE, while maintaining low leverage levels. Industry tailwinds will further solidify our growth trajectory. We would see launch of new projects in underserved micro-markets of MMR, Pune and Bengaluru. The business development pipeline remains robust which will cater to our growth beyond FY26.

While residential real estate continues to be the primary growth engine for the Company, we will continue to invest in building up our annuity income streams, with the objective of de-risking the development business.

INTERNAL CONTROLS

The Company has a robust internal financial control system, commensurate with the size, scale and complexity of its operations. This system encompasses adequate controls, procedures and policies designed to ensure the orderly and efficient conduct of business, adherence to established policies, the safeguarding of company assets and the establishment of a reasonable framework for the prevention and detection of fraud and errors, as well as the accuracy and completeness of accounting records. Appropriate framework is in place to ensure effective internal controls over financial reporting, thereby enhancing the integrity of the Companys financial statements.

The design of key processes and various policies is subject to periodic review to ensure the ongoing adequacy of controls. The Company has an Internal Audit function, headed by the Chief Internal Auditor. The annual internal audit plan is reviewed and approved by the Audit Committee at the commencement of each financial year.

The Management Audit Committee (MAC) reviews detailed internal audit reports prior to their presentation to the Audit Committee. The MAC is chaired by the Managing Director & Chief Executive Officer and co-chaired by the Chief Financial Officer, with other functional heads attending meetings as required. The Audit Committee is responsible for overseeing the scope and coverage of the Internal Audit plan and evaluating the overall audit findings. Functional heads participate in these meetings as necessary to provide updates on control and compliance developments within their respective functions.

The Internal Audit team conducts effectiveness testing of internal controls across all project sites and functions. The findings of these tests, along with any recommended corrective actions, are reviewed by management on a regular basis. Any deviations identified are reported to the Audit Committee periodically.

A certificate from the CEO and CFO, confirming effectiveness of internal controls and reiterating their responsibility to report deficiencies to the Audit Committee and rectify the same, forms part of the Corporate Governance Report.

HUMAN RESOURCE

We believe that our employees and our We Care culture are central to our continued success. We are committed to developing and further enhancing the skills of our workforce and to providing them with a safe, inclusive, caring and unbiased work environment. Our workplace culture fosters creativity, agility, innovation and meritocracy. We uphold and are committed to respecting the human rights of all our stakeholders.

As of March 31, 2025, we had 5,359 permanent employees, representing a 17.5% increase over FY24. Further details on our employee practices and processes can be found in the Human Capital section and in the BRSR forming part of the Integrated Report.