Sri Lotus Developers & Realty Ltd Management Discussions

Management Discussion and Analysis Report

1. Economic Review

1.1 Global Economy

The global economy remained resilient in CY2025, recording growth of 3.4% despite navigating an environment shaped by geopolitical conflicts, shifting trade relationships, elevated debt levels and persistent policy uncertainty. While global inflation continued to ease, growth trajectories varied considerably across regions. Advanced economies experienced slower expansion as the effects of tighter monetary policies and structural challenges persisted, whereas emerging markets benefited from stronger domestic demand, investment activity and improving macroeconomic stability.

The United States continued to outperform expectations, supported by resilient consumer spending, a healthy labour market and sustained business investment. In contrast, the Euro Area witnessed a modest recovery, although industrial output and manufacturing activity remained subdued. Across emerging markets, Asia continued to be the principal engine of global growth, led by resilient consumption, infrastructure investments and favourable demographic trends.

Outlook

The global economy is expected to maintain moderate growth over the next two years, with the IMF projecting expansion of 3.1% in 2026 and 3.2% in 2027. The outlook is supported by easing inflation, improving financial conditions and resilient domestic demand across several major economies.

Nevertheless, the operating environment remains complex. Ongoing geopolitical conflicts, increasing trade protectionism, supply chain realignments, fiscal constraints and climate-related disruptions continue to pose risks to global economic stability. At the same time, accelerating adoption of artificial intelligence and digital technologies is expected to enhance productivity and create new avenues for long-term growth.

Source: World Economic Review by IMF, April 2026

2.2 Indian Economy

The Indian economy demonstrated strong resilience during FY 2025-26 despite a challenging global backdrop characterised by geopolitical tensions, trade disruptions and financial market volatility. GDP growth accelerated to 7.7%, up from 6.5% in the previous year, driven by robust domestic demand, moderating inflation, accommodative monetary policy and sustained public infrastructure investment. GST rate reductions during the year further supported consumption, while manufacturing, construction and services maintained broad-based growth. Agricultural performance also remained favourable, aided by a normal monsoon and improved farm activity.

Indias external sector remained stable despite global uncertainties. The current account deficit stayed contained at 0.6% of GDP, supported by resilient services exports and remittances. Gross FDI inflows reached US$94.8 billion, reflecting sustained investor confidence in Indias longterm growth prospects, particularly across technology, manufacturing, digital infrastructure and AI-led sectors. However, heightened global risk aversion resulted in US$16.4 billion of net portfolio outflows, while the Indian Rupee depreciated 9.4% against the US dollar amid global trade and commodity market volatility. Nevertheless, strong foreign exchange reserves and sound macroeconomic fundamentals helped contain financial market pressures.

Outlook

Looking ahead, the RBI projects GDP growth of 6.6% for FY 2026-27, supported by resilient domestic consumption, improving private investment, continued services sector momentum and sustained public infrastructure spending. Inflation is expected to gradually rise towards 5.1%, while the outlook remains subject to global trade uncertainties, geopolitical developments, commodity price movements and weather-related risks, including the possibility of El Nino affecting agricultural output and food inflation. Despite these challenges, Indias strong macroeconomic fundamentals and policy support position the economy well for sustained long-term growth.

2. Industry Review

2.1 Real Estate Industry

Indias real estate sector continued its transition towards a more mature and value-driven growth phase in 2025. While the industry historically measured progress through project launches, inventory creation and sales volumes, market dynamics increasingly shifted towards asset quality, execution excellence, sustainability and long-term value creation.

The sector maintained strong growth momentum, supported by rising institutional participation, expansion of REIT-backed assets, corporate leasing activity and increasing demand from Global Capability Centres (GCCs). Indias real estate market continued to benefit from structural growth drivers including urbanisation, rising incomes, infrastructure development and evolving consumer preferences.

The residential segment witnessed a clear premiumisation trend, with buyers increasingly prioritising superior construction quality, efficient layouts, sustainable features, integrated amenities and enhanced lifestyle experiences. Premium housing continued to gain traction, reflecting a shift from volume-led growth towards differentiated, high- quality developments.

Commercial real estate also underwent a transformation, with occupiers increasingly seeking sustainable, technology-enabled and experience-oriented workplaces. The demand landscape evolved from conventional office spaces towards green-certified, efficient and employeecentric environments, driven by ESG priorities and changing workplace expectations.

Technology adoption emerged as a key enabler of improved project execution. Developers increasingly leveraged digital tools such as Building Information Modelling (BIM), enterprise resource planning systems, digital monitoring platforms and automated quality-control solutions to enhance transparency, reduce execution risks and improve operational efficiency.

Key Market Drivers

• Rapid Urbanisation and Changing Demographics

Rising urban population, increasing household formation and evolving lifestyle preferences continue to drive demand for residential, commercial and mixed- use developments.

• Infrastructure-Led Growth

Sustained government investments in roads, metro networks, logistics, industrial corridors and urban infrastructure are creating new growth corridors and enhancing real estate demand.

• Premiumisation of Residential Demand

Homebuyers are increasingly prioritising quality, sustainability, larger living spaces, superior amenities and integrated communities, driving growth in premium and luxury housing segments.

• Growing Institutional Participation

Increased participation from domestic and global investors, private equity funds and REITs is strengthening transparency, governance standards and long-term capital availability in the sector.

• Expansion of GCCs and Corporate Leasing

The continued growth of Global Capability Centres, technology firms and multinational enterprises is driving demand for Grade A, sustainable and experience-led office spaces.

• Policy Support and Regulatory Reforms Initiatives such as RERA, affordable housing programmes and infrastructure development policies are improving market transparency, strengthening consumer confidence and supporting sectoral growth.

• Sustainability and Green Buildings

Growing emphasis on ESG commitments, energy efficiency and sustainable construction practices is accelerating adoption of green-certified developments.

• Technology-Enabled Transformation

Digital tools, BIM, AI-driven analytics and construction management platforms are improving project planning, execution efficiency and quality control across the real estate value chain.

• Rising Investment in Alternative Real Estate Assets

Growth in sectors such as warehousing, data centres, industrial parks and flexible workspaces is expanding opportunities beyond traditional residential and commercial segments.

Outlook

The outlook for Indias real estate sector remains positive, supported by strong macroeconomic fundamentals, continued urbanisation and sustained demand across residential, commercial and infrastructure-linked segments.

The sector is expected to expand further, with Indias real estate market projected to grow from an estimated US$585 billion in 2026 to US$926 billion by 2031, supported by institutional investments, REIT participation, corporate expansion and GCC growth.

Residential demand is expected to remain resilient, with greater emphasis on premium housing, sustainable communities and lifestyle-oriented developments. Developers with strong execution capabilities, differentiated offerings and a focus on customer experience are likely to gain a competitive advantage.

The commercial segment is expected to witness continued demand for Grade A, green-certified and technology- enabled office spaces as businesses increasingly align real estate decisions with sustainability and workplace transformation objectives.

Going forward, the industry is expected to evolve from a scale-led model towards a quality-led ecosystem, where design excellence, sustainability, digital integration and operational performance become key drivers of long-term value creation.

Source: https://www.thehindu.com/life-and-style/homes- and-gardens/how-indian-real-estate-is-prioritising-quality- over-quantity/article71260835.ece

Q1 2026 Residential Market Highlights

• Housing sales across the top seven cities reached 70,631 units in Q1 2026, registering 8% YoY growth, supported by improving buyer demand despite heightened economic uncertainty.

• Sales growth remained below new launches, reflecting a cautious demand environment even as supply outpaced absorption.

• The return to positive sales growth marked a recovery after consecutive YoY declines recorded between Q4 2024 and Q4 2025.

• Bengaluru, Mumbai, Pune and Delhi NCR accounted for nearly 77% of total housing sales, each recording over 10,000 units sold during the quarter.

• Chennai emerged as the fastest-growing market with 61% YoY growth, driven by strong IT-led employment and improved infrastructure connectivity.

• Delhi NCR recorded 30% YoY growth, supported by infrastructure development and pent-up demand, while Bengaluru grew 18%, backed by quality supply and sustained office market expansion.

• Pune was the only major market to witness a decline, with sales falling 14% YoY amid lower project launch activity.

2.2 Mumbai Metropolitan Region (MMR)

The Mumbai Metropolitan Region (MMR) continued to reinforce its position as Indias leading residential real estate market in Q1 2026, driven by strong supply activity, sustained buyer interest and expanding demand across emerging growth corridors.

Launches: MMR Leads Residential Supply

• MMR accounted for approximately 32% of residential launches across Indias top seven cities, with nearly 40,000 units launched during Q1 2026.

• New launches increased by 6% quarter-on-quarter and 30% year-on-year, reflecting continued developer confidence and market depth.

• Mumbai contributed nearly 66% of MMRs launch activity, with healthy participation from both core and peripheral locations.

• Navi Mumbai and Thane accounted for 19% and 15% of launches, respectively, with Thane witnessing a sharp increase in launch momentum during the quarter.

• The supply mix remained diversified, led by the affordable segment (22%), followed by upper mid-end and high-end segments (20% each), reflecting balanced demand across price categories.

Sales: Peripheral Markets Drive Demand

• MMR recorded approximately 32,800 housing units sold in Q1 2026, contributing around 32% of residential sales across Indias top seven cities.

• Sales remained resilient, increasing 4% year-on-year, despite a marginal 5% sequential moderation amid market consolidation.

• Mumbai continued to dominate regional demand, accounting for 71% of MMR sales, followed by Navi Mumbai (18%) and Thane (11%).

• Peripheral markets emerged as key growth drivers, contributing nearly 60% of Mumbais sales, led by:

• Peripheral Central Suburbs - 34%

• Peripheral Western Suburbs - 26%

• Thane witnessed strong momentum, recording 31% sequential growth in sales, highlighting increasing buyer preference for emerging residential corridors.

Inventory: Healthy Demand-Supply Balance

• MMR accounted for nearly 31% of total available residential inventory across Indias top seven cities.

• Available inventory increased by 4% quarter-on- quarter and year-on-year, reflecting continued new supply additions.

• Inventory remained concentrated in the island city, which accounted for nearly 75% of MMRs available stock, followed by:

• Navi Mumbai - 14%

• Thane - 11%

• The region maintained a balanced inventory position, with inventory overhang stable at 17 months as of Q1 2026, indicating healthy demand-supply equilibrium.

Outlook

MMR is expected to maintain its residential growth momentum, supported by infrastructure development, improving connectivity and sustained end-user demand. Peripheral Central Suburbs and Navi Mumbai are emerging as key growth corridors, driven by expanding urban infrastructure and new development opportunities.

Progress on major infrastructure projects, particularly the Navi Mumbai International Airport, is expected to further enhance regional connectivity, accelerate development activity and strengthen demand across adjoining micromarkets.

Demand is likely to remain broad-based, with continued traction across the affordable, upper mid-end and high- end segments. Infrastructure-led growth in Thane and peripheral locations is expected to support increased buyer interest, while the preference for well-priced, value-oriented homes remains resilient despite broader macroeconomic uncertainties.

With a balanced demand-supply environment, improving infrastructure ecosystem and strong end-user fundamentals, MMR remains well positioned for sustained residential growth and long-term value creation.

2.3 Commercial Real Estate

Indias office market continued its strong momentum in Q1 2026, supported by robust occupier demand, healthy absorption and improving market fundamentals. Net absorption reached a record 13.7 million sq. ft., the highest-ever for a first quarter, registering 7.0% YoY growth. Bengaluru and Hyderabad remained the key contributors, accounting for 36.0% and 22.6% of total absorption, respectively.

Gross leasing activity also reached an all-time high for Q1, rising 10.2% YoY to 21.5 million sq. ft., driven by renewed momentum across technology, flexible workspaces and BFSI segments. The technology sector emerged as the largest contributor with a 29.1% share, followed by flexible workspaces (25.9%) and BFSI (20.0%).

Market conditions remained favourable for landlords, with vacancy levels declining by 50 basis points QoQ to 14.7%, the lowest level in five years, supported by strong demand and moderated new supply additions. Tight availability of premium office spaces, particularly across core micro-markets, continued to support rental growth, with institutional-grade assets commanding a premium due to superior quality, amenities and tenant experience. The overall supply pipeline remains healthy, positioning Indias office market to reach 1 billion sq. ft. of office stock by mid-2027.

Outlook

Indias office market is expected to maintain its growth momentum, supported by strong fundamentals including a skilled talent pool, innovation capabilities, cost advantages and rising global confidence in India as a strategic business hub. GCC expansion, technology-led transformation and demand for high-quality office spaces are expected to remain key growth drivers, with leasing activity potentially reaching 100 million sq. ft. over the next two years.

GCCs will continue to anchor demand, leveraging Indias capabilities in AI, digital engineering, analytics and R&D to build global innovation centres. Tight vacancy levels, expanding occupier footprints and institutional-grade supply are expected to sustain rental growth and reinforce Indias position as a preferred destination for global business expansion.

2.4 Luxury Housing Segment

Indias luxury housing market is undergoing a significant transformation, with homes increasingly becoming a reflection of lifestyle aspirations, design preferences and global standards. Buyers are moving beyond conventional measures of space and are seeking residences that offer superior architecture, sustainability, wellness features, enhanced security and curated lifestyle experiences.

India has emerged as the sixth-largest market globally for branded residences, contributing nearly 4% of global supply. The segment, currently valued at approximately US$5 billion, has witnessed strong expansion, with branded residential projects increasing by 55% over the last five years and over 160% in the past decade.

Source: https://kpmg.com/in/en/blogs/2026/04/indias- luxury-housing-boom-how-are-branded-residencies- redefining-homeownership.html#accordion-de328cf55f- item-0ce5c5dd23

Key Growth Drivers

• Rising Affluence and Wealth Creation

The expanding base of high-net-worth and ultra-high- net-worth individuals is driving demand for premium homes that offer quality, exclusivity and international standards rather than merely larger living spaces.

• Trust Through Branded Developments

Collaborations between global hospitality brands, design firms and reputed developers are strengthening consumer confidence. Branded residences provide buyers with greater assurance around construction quality, service standards, asset value and longterm reliability.

• Evolving Lifestyle Preferences

A globally exposed consumer base is increasingly prioritising wellness-oriented living, sustainable design, community experiences and technologically enabled homes, accelerating demand for premium developments.

Premiumisation Driving Market Growth

The premium housing segment continues to lead residential demand, reflecting a structural shift towards quality- led consumption.

• Homes priced above Rs.1 crore accounted for 71% of total residential sales in Q1 2026, compared with 59% in Q1 2025, registering 30% year-on-year growth.

• The Rs.1.5 crore- Rs.3 crore segment recorded exceptional growth of 67% year-on-year, highlighting strong demand for spacious, well-designed residences in prime locations.

• In contrast, sales of homes priced below Rs.1 crore declined by 24% year-on-year, with their share reducing to 29% from 41% in Q1 2025.

This shift reflects changing consumer preferences, constrained affordable housing availability in key urban locations and developers increasing focus on differentiated, higher-value projects.

Outlook

Indias luxury housing segment is expected to maintain its growth momentum, supported by rising wealth creation, increasing global exposure among buyers and growing preference for branded and experience-led residences. The segment is projected to witness further expansion in the coming years, driven by sustained demand from affluent buyers and NRI investors.

However, disciplined execution, prudent capital management and effective project delivery will remain critical as developers navigate rising construction costs, market competition and potential global uncertainties.

2.5 Coastline Infrastructure

Mumbais luxury residential landscape is entering a new phase of growth as enhanced coastal infrastructure reshapes buyer preferences and expands the citys premium housing footprint beyond its traditional hubs. Historically, waterfront locations across the western suburbs offered an aspirational lifestyle but were constrained by limited connectivity. With transformative projects such as the Mumbai Coastal Road and the upcoming Versova-Bandra Sea Link, travel times have reduced significantly, making coastal living more accessible while unlocking new opportunities for premium residential development.

Improved connectivity, coupled with increasing participation from Grade A developers, is driving renewed interest in emerging coastal micro-markets such as Malad, Borivali and the extended western corridor. Approximately 75-80 redevelopment projects, representing over 250 residential units and a gross development value of around T6,000 crore, are expected to be launched over the next 8-9 quarters, broadening Mumbais luxury housing landscape. While established destinations such as Worli, Bandra and Juhu continue to command strong demand, the next wave of luxury growth is expected to be led by these emerging coastal locations, supported by larger land parcels, waterfront views, improved accessibility and evolving lifestyle preferences.

Source: https://www.constructionweekonline.in/news/ mumbai-coastal-suburbs-to-be-the-next-luxury-hub-jll

3. Company Overview

Sri Lotus Developers & Realty Limited is a Mumbai-based luxury and ultra-luxury real estate developer focused on residential and commercial developments, with a strong emphasis on redevelopment and joint development projects.

Leveraging an asset-light business model, the Company partners with societies and landowners to create premium lifestyle developments across high-demand micro markets in Mumbai. With integrated in-house capabilities across sales, construction and business development, Lotus Developers focuses on superior execution, quality control and customer experience.

The Company has established a differentiated position through its premium projects, accelerated delivery timelines, strong market presence and focus on thoughtfully designed developments inspired by the Blue Water & Garden View (B&G) concept.

Growth & Project Pipeline Highlights

• Strong Project Launch Momentum - Launched Lotus Celestia, Versova in March 2026, achieving bookings of Rs.155 crore within seven days of launch, with an estimated GDV of Rs.1,400-1,500 crore.

• Robust Portfolio Expansion - Added nine new projects in FY26 with a cumulative estimated GDV of Rs.8,500-9,000 crore, strengthening the development pipeline across key Mumbai micro markets.

• Strategic Market Presence - Executed development agreements for marquee projects including Lotus Portofino (Versova), Lotus Sky Plaza (Oshiwara), Lotus Odyssey (Bandra), Lotus Avalon (Juhu), Lotus Imperial (Bandra) and a mixed-use development at GIFT City.

• Growing Redevelopment Footprint - Secured preferred developer appointments for projects including Lotus Upper Crest (Bandra), Lotus Insignia and Lotus Orion, reinforcing its leadership in redevelopment-led growth.

• Expanding FY27 Launch Pipeline - Plans to launch six projects in FY27 with an estimated GDV of Rs.5,000- 5,500 crore, including Lotus Aquaria, Lotus Trident, Lotus Aurelia, Lotus Sky Plaza, Lotus Portofino and Lotus Odyssey.

• Sustained Growth Strategy - Continue to identify and add high-potential projects to build a strong, scalable development pipeline.

SWOT Analysis Strengths

• Strong Brand Presence in Mumbai - Established reputation through timely delivery, quality execution and a strong foothold across key Mumbai micro markets.

• Integrated Design & Execution Capabilities - In-house architectural and engineering expertise enables better control over quality, costs and project timelines.

• Asset-Light Business Model - Redevelopment and joint development partnerships reduce capital intensity while supporting scalable growth.

• Technology-Enabled Operations - Adoption of BIM, CRM tools and virtual walkthroughs enhances project execution and customer experience.

Weaknesses

• Geographic Concentration - Strong dependence on Mumbais western suburbs increases exposure to regional market dynamics.

• Limited Large-Scale Project Experience:

Current portfolio is largely focused on mid-sized developments, which may impact scalability into larger projects.

• Limited National Brand Visibility

- Lower recognition beyond Mumbai may constrain expansion into new markets.

Opportunities

• IPO-Led Growth Enablement

- Enhanced visibility and access to capital can support portfolio expansion and entry into new micro markets.

• Expansion into Premium Locations

- Presence in high- value markets such as Nepean Sea Road, Prabhadevi and Bandra West provides opportunities to strengthen luxury positioning.

• Growing Redevelopment Opportunity - Mumbais ageing housing stock and redevelopment potential offer significant growth avenues.

Threats

• Regulatory & Approval Risks - Changes in zoning regulations, RERA requirements and environmental approvals may impact project timelines.

• Execution Dependencies - Delays from external agencies, vendors and approvals can affect delivery schedules.

• Market & Interest Rate Volatility - Economic cycles, higher interest rates and demand fluctuations may impact luxury housing sales

4. Financial Review

			in crore)
	2025-26	2024-25	Growth (%)
Revenue from operations	769.0	549.7	39.89
EBITDA	280.6	289.0	-2.91
EBITDA margin	36.5%	52.6%
PAT	243	228	6.57
PAT margin	31.6%	41.5%

Key Ratios

Particulars	2025-26	2024-25	Reasons of variances
Operating Profit Margin (EBITDA)	36.49%	52.57%	Revenue mix in FY25 contains high margin revenue due to rate appreciation in that year. The operating margins normalised in FY26.
Net profit Margin	31.64%	41.46%	Change in Net profit margin is primarily due to change in revenue mix
Return on Equity (ROE)	17.11%	41.36%	Equity base of the Company increased due to equity raise in H2 of FY25 and IPO in H1 of FY26
Return on capital employed (ROCE)	13.61%	27.25%	Due to equity raise capital base has increased in FY26
Current Ratio	6.08	5.14	Due to increase in cash balance and inventories
Debt - Equity Ratio	0.07	0.13	Company has low debt and changes are primarily due to equity raised through IPO
Debtors turnover ratio	2.88	4.44	Changes are due to increase in trade receivables
Inventory Turnover Ratio	1.14	1.09	Inventory increased in FY26 due to investment in ongoing and upcoming projects

5. Operational Review

Type of Project	No. of Projects	Developable Area (Sq. ft.)	Saleable Area (Sq. ft.)
Completed Projects
Residential	2	2.48	1.06
Commercial	2	6.83	2.71
Ongoing Projects
Residential	7	17.96	5.22
Upcoming Projects
Residential	10	27.57	9.68
Commercial	4	31.57	18.06
Total Projects	25	86.41	36.73

6. Human Resources

Our people drive every landmark development we create, bringing together expertise across design, engineering, project execution, construction, sales and customer engagement. We invest in continuous learning, leadership development and digital capabilities while embedding safety across every stage of execution. An inclusive, collaborative culture, supported by recognition, engagement and wellness initiatives, empowers our people to take ownership, innovate and deliver excellence for our customers.

Read more on page 26

7. Internal Control and Systems

The Companys independent and robust Internal Audit processes provide assurance on the adequacy and effectiveness of internal controls, compliance with operating systems, internal policies, and regulatory requirements. The Company has in place an adequate system of internal control commensurate with its size and nature of its business. These have been designed to provide reasonable assurance that all assets are safeguarded and protected against loss from unauthorised use or disposition and that all transactions are authorised, recorded, and reported correctly and the business operations are conducted as per the prescribed policies and procedures of the Company. The Audit committee and the management have at periodic intervals, reviewed the adequacy of the internal control systems and suitable steps are taken to improve the same.

8. Cautionary Statement

Certain statements in the Management Discussion and Analysis describing the Companys objectives, and predictions may be ‘forward-looking statements within the meaning of applicable laws and regulations. Actual results may vary significantly from the forward-looking statements contained in this document due to various risks and uncertainties. These risks and uncertainties include the effect of economic and political conditions in India, volatility in interest rates, new regulations and Government policies that may impact the Companys business as well as its ability to implement the strategy. The Company does not undertake to update these statements.