Top India Homebuilder Drops in Debut After Decade-Long IPO Wait
Residential and commercial buildings are seen from Lodha Altamount in Mumbai. (Photographer: Dhiraj Singh/Bloomberg  )

Top India Homebuilder Drops in Debut After Decade-Long IPO Wait

Shares of India’s biggest homebuilder Macrotech Developers Ltd. slipped as much as 13% in their long-awaited market debut on Monday.

The stock dropped to as low as 421.15 rupees ($5.6) in early trading, compared with an initial public offering price of 486 rupees. It pared most of the losses to trade at 472.05 rupees in the afternoon, down 2.9% from the IPO price. The S&P BSE Sensex gauge was 2.1% lower as daily Covid-19 infections in India continued to top previous highs.

The 25-billion rupee IPO by Mumbai-based Macrotech, formerly known as Lodha Developers Ltd., is the third-largest in a flurry of new listings in India this year amid a gush of liquidity from foreign investors and local retail traders. Including Macrotech, 29 debutantes have raised about $3 billion so far in 2021, according to data compiled by Bloomberg.

READ: India IPO Haul This Year Hits Post GFC High: ECM Watch

India’s newest stocks have been performing well overall. The S&P BSE IPO Index, which tracks shares for two years after listing, has rallied 6.8% this year, outperforming the little changed Sensex.

Top India Homebuilder Drops in Debut After Decade-Long IPO Wait

The successful listing of Macrotech ends a more than decade-long effort to take the developer public, after previous attempts in 2009 and 2018 were shelved. A global equity rout in mid-October 2018, caused by concerns about geopolitical tensions and rising interest rates, upended its plan to raise 55 billion rupees then.

Macrotech aims to use the funds from its IPO to help reduce its debt load by at least 15 billion rupees. The company also plans to push ahead with asset sales to reduce net debt to 127 billion rupees from the 184 billion rupees it carried as of December, according to Chief Executive Officer Abhishek Lodha.

Unsold Inventory

Even with its less-than-stellar market debut, Macrotech’s market capitalization stands at over 210 billion rupees, ranking it the country’s third-largest realty firm after rivals DLF Ltd. and Godrej Properties Ltd. Founders of Macrotech, which includes CEO Lodha and a family trust, still own about 88.5% after the listing.

Rajnath Yadav, an analyst with Choice Equity Broking Pvt., said large real-estate companies with better access to capital and ability to leverage are capturing market share held by smaller players, and Lodha with unsold inventory of 5.5 million square feet of ready-to-move residential projects, may benefit.

“The next trigger for the stock will be the company’s ability to reduce the huge inventory,” Yadav said, advising investors to buy the stock for the longer term.

The oversubscribed IPO saw participation from institutional investors, including a unit of Nomura Holdings Inc. and the real estate arm of Canadian pension fund Caisse de Dépôt et Placement du Québec. Managers included Axis Capital Ltd., JPMorgan India Pvt. and Kotak Mahindra Capital Co.

©2021 Bloomberg L.P.

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