Should You Subscribe to Macrotech (Lodha Group) IPO?

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Should You Subscribe to Macrotech (Lodha Group) IPO?

By Aditya Raghunath -- Macrotech Developers Ltd (NS: LODV ), real estate a company that operates in the MMR (Mumbai Metropolitan Region) under the Lodha Group brand, is coming out with a Rs 2,500 crore IPO today. The IPO has a price band range of Rs 483 – Rs 486, and proceeds will largely go to reduce debt by 24% to Rs 12,700 crore from Rs 16,700 crore. Is this an IPO worth investing in?

The amount of debt that the company carries is very high but demand for housing has experienced an uptick during the COVID-19 pandemic, and Lodha is focusing on reducing the debt. Angel Broking has said that the company hasn’t been able to generate positive cash flow in the last three years, and this trend is likely to continue in the future.

Macrotech is also too focused on one region in the country and a change in rules and regulation might hurt the construction giant.

Another key factor to consider is that the GMP (grey market premium) for the IPO has completely dried up according to a report in The Economic Times. The GMP for Macrotech was at Rs 25-Rs 30 shares some days back but came down to Rs 2-Rs 4 last night.

If this continues, listing gains might be very limited or even non-existent in the Macrotech Developers IPO.

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