Macrotech says home prices need to rise

1. Macrotech says home prices need to rise

2. Real estate developer Macrotech — erstwhile Lodha Developers — believes price hikes are a must in the industry, which many experts say is on the cusp of a multi-year upcycle. Price hikes are "essential" in real estate, but developers need to ensure they remain 100 bps below wage growth to ensure the industry doesn't suffer, Sushil Kumar Modi, CFO of Macrotech Developers, told CNBC-TV18. As long as that condition holds, affordability continues to improve, unfolding effective housing demand, he said. Remarks from one of the top management of one of the country's major property developers come at a time when developers are betting on strong demand despite an environment of steep hikes in interest rates.

3. Cognizant of steep hikes in benchmark interest rates, Macrotech is cautious about making any changes to its guidance for the year ending March 2023. The company is confident of exceeding its sales guidance of Rs 11,500 crore for the year, Modi said. He hinted at a price hike of two percent from current levels. That is on top of an increase of 2-2.5 percent across its projects in April-September. The management's confidence is driven by strong demand in the first half of the year. "We are on the journey perhaps to outperform our guidance," the CFO said. "We are equally cognizant of some of the macro developments that are happening all around us in terms of interest rates and whatnot, and, hence, to that extent, we would equally like to be cautious," he said. India entered a festive season last month that begins with Diwali and goes on till the New Year, which typically leads to higher demand for discretionary spending — a more favourable period for real estate developers.

4. The second half of a financial year accounts for about 60 percent of Macrotech's full-year business due to festivities, Modi said. Macrotech reported record quarterly sales of Rs 3,148 crore for the July-September period with the addition of four projects in Mumbai and Pune. Its sales for the six-month period ended in September stood at Rs 6,004 crore — its highest in the first half of a financial year. The Macrotech management exuded confidence in a robust performance with the onset of the festive season in the six months to March 2023. Real estate shares have been among the worst-hit spaces on Dalal Street over the past few months. Macrotech shares have lost one-fifth of their value so far in 2022, a period in which the benchmark Nifty50 index has grown 4.3 percent.