Fitch keeps Lodha's rating at 'B'

New Delhi: Fitch has affirmed realty firm Lodha Developers' credit rating at 'B' and maintained negative outlook, even as the company's sales booking rose to over Rs 6,900 crore last fiscal despite demonetisation.

Fitch said it might consider revising the outlook to 'Stable' if the Mumbai-based developer addresses its near-term domestic debt maturities, and secure sustained financing for the London project. Lodha group has projects in Mumbai, Pune and London property markets. "Fitch Ratings has affirmed India-based home builder Lodha Developers Pvt Ltd's Long-Term Issuer Default Rating (IDR) at 'B', and maintained the negative outlook," the rating agency said. The affirmation of Lodha's IDR reflects the company's healthy pre-sales and cash collections in the 2016-17 fiscal in spite of weak domestic demand for real estate, it said.

 Lodha's sales bookings improved to Rs 6,920 crore in FY17 from Rs 6,430 crore in FY16, amid weaker domestic demand for property, especially against the backdrop of demonetisation. "Surprisingly, demand for Lodha's projects were somewhat less impacted in the December quarter compared with most of the other large Indian home builders that Fitch tracks," the rating agency said.

Lodha's sales bookings bounced back strongly in February and March this year, Fitch said. It attributed this to the advanced stage of completion of many of its large projects as well as the view that the adverse effects of demonetisation on large homebuilders appears to have passed.

Strong sales in FY17 were also supported by the company's affordable housing project at Pallava. Lodha's cash collections improved significantly to Rs 7,620 crore from Rs 6,070 crore during the period under review. Fitch expects the company's pre-sales to remain broadly flat around Rs 7,000 crore in the current fiscal.

The rating agency said, "the negative outlook reflect the near-term risks to the company's credit profile, in particular refinancing risk associated with sizeable maturities, including financing for its London project, over the next 12 months".

Although Lodha has access to domestic funding sources, Fitch said the company has not yet communicated a detailed refinancing plan for its upcoming maturities.