International rating agency Fitch has affirmed builder Lodha Developers’ Long-Term Issuer Default Rating at ‘B’. The Outlook is Stable, reports financial newspapers.
The agency has also affirmed the rating on the outstanding $325 million 12% senior unsecured notes issued by Lodha Developers International and guaranteed by Lodha and certain subsidiaries at ‘B’ with a Recovery Rating of ‘RR4’.
Fitch said Lodha’s ratings are supported by its strong market positioning, with the highest volume market share in the Mumbai metropolitan region.
“The ratings are constrained by Lodha’s high leverage, which we expect to remain elevated in the financial year ending March 2019 (FY19), before inching lower over FY20-FY21 as the company completes the construction of its London projects and starts to access cash,” the rating agency said in a statement.
Lodha’s volume market share in the Mumbai metropolitan region has risen to 13% as of nine months of 2017-18, up from 10% in 2016-17 and 8% in 2015-16, outpacing the overall market.
Lodha has launched projects at a new location of Upper Thane within the affordable segment in addition to its flagship development underway at Palava, and other suburban locations in Mumbai. Expansion into the affordable segment could erode margins, but Fitch does not expect this to be significant.
The rating agency expects Lodha’s undrawn credit lines, cash flow and business-risk profile to help the company secure incremental refinancing when needed.
It said Lodha’s first London project in Lincoln square to be completed during the financial year, releasing cash flow of around 303 million pounds, available for servicing debt at London assets during this period.
Lodha’s pre-sales in India increased at a compound annual growth rate (CAGR) of 12% between FY16-FY18 and collections rose by 18%, but collections from the London projects will only become due on project completion and handover of sold units.