/** Title: Lodha’s FY26: Profitable Growth, Lower Leverage, and a Bigger Annuity Ambition */

Lodha’s FY26: Profitable Growth, Lower Leverage, and a Bigger Annuity Ambition

Lodha Developers Limited closed FY26 with a familiar combination that has become central to its investor messaging since listing: scale up the development engine, protect margins, and keep leverage conservative. The audited results for Q4 FY26 and FY26 show that the growth was not just in sales value but also in profitability, with PAT reaching INR 34.3 billion in FY26 and PAT margin at about 20%. Revenue for FY26 rose to INR 166.8 billion, up 21% year on year, while adjusted EBITDA increased 14% to INR 56.5 billion.

In Q4 FY26, Lodha reported revenue of INR 47.1 billion, up 12% year on year, adjusted EBITDA of INR 16.5 billion, and PAT of INR 10.1 billion. Operationally, the quarter was highlighted by record pre-sales of INR 58.9 billion, up 23% year on year. For the full year, pre-sales stood at INR 205.3 billion, up 16%.

Two themes ran through both the investor presentation and the earnings call. First, the company continues to prioritize profitability and ROE resilience, repeatedly describing pre-sales as a means rather than the end goal. Second, Lodha is attempting to widen its earnings base through annuity assets, especially via a large data centre opportunity at Palava.

FY26 performance in numbers and what changed

The FY26 income statement shows a year of strong growth, but also a mix-driven margin change. Adjusted EBITDA margin for FY26 was 33.9%, down from 36.0% in FY25. Management attributed this primarily to lower contribution from land sales, rather than deterioration in core development profitability. On the call, the CEO reiterated that the underlying development margin remains healthy, citing an embedded development margin of about 33% for the year.

Collections grew more modestly than pre-sales. FY26 collections were INR 151.6 billion, up 5% year on year. The cash flow table in the presentation shows FY26 collections of INR 149.6 billion and operating cash flow of INR 71.2 billion. However, Lodha continued to invest heavily in growth, particularly land and approvals. FY26 growth investments in the DevCo business were shown at INR 67.9 billion, which drove the reported “surplus for capital providers” to negative INR 9.6 billion for the year.

The balance sheet provides additional context on how the company is choosing to operate at this stage of the cycle. Total assets rose to INR 589.4 billion as of March 2026 from INR 498.4 billion a year earlier, with inventories increasing to INR 402.6 billion. Total equity rose to INR 234.3 billion.

Financial summary

Note: All figures are as disclosed in the investor presentation.

Guidance and the push for predictable compounding

For FY27, Lodha guided to pre-sales of INR 240 billion and embedded EBITDA margin of 32% to 34%. The management discussion placed a notable emphasis on profit growth rather than only top-line or booking momentum. On the call, the CEO stated that the company’s medium-term goal is to deliver around 20% PAT CAGR, moving from about INR 34 billion in FY26 to more than INR 85 billion by FY31.

Management also linked future free cash flow potential to a pullback in near-term business development spend. FY26 was described as a “standout” year for business development, with additions of about INR 601 billion of GDV across 12 projects. In the CEO’s framing, this creates multi-year supply visibility and allows Lodha to be more selective in incremental project additions over the next couple of years. The company said this should translate into higher free cash flow and reduced leverage in the development business.

The leverage message is consistent with the presentation’s stated ceiling of net debt to equity of 0.5x. Net debt at INR 53.8 billion implies a net debt to equity of 0.23x at year end. The company also highlighted improvements in funding cost, with average cost of debt at 7.8%, down by about 90 basis points year on year.

The operating footprint and the NCR pilot

Lodha positions its development business as diversified across luxury, premium, and mid-income segments, with operating presence in MMR, Pune, Bengaluru, and now NCR from FY27. In FY26, the micro-market split shows MMR South and Central as the single largest contributor to pre-sales at INR 79.2 billion. Pune contributed INR 22.6 billion, Bengaluru contributed INR 24.0 billion, and Extended Eastern Suburbs contributed INR 25.1 billion.

A meaningful strategic update for FY26 was the entry into NCR. Lodha said it signed two joint development projects in Gurgaon with GDV of INR 33 billion and development potential of 1.1 msf. The company appointed a CEO for NCR and is building a local team. However, management was explicit that potential NCR launches were not included in the FY27 launch pipeline guidance, and could occur in Q4 FY27 or early FY28.

Palava: infrastructure-led value and the data centre thesis

Palava remains a central long-term narrative for Lodha. The investor presentation argues that Palava sits at the centre of multiple infrastructure upgrades within the Mumbai Metropolitan Region. Management linked improved connectivity to future price appreciation, pointing to current price gaps between Palava and established suburbs.

The sharper near-term catalyst discussed was data centres. Lodha has about 400 acres of shovel-ready land at Palava, with 3 GW power availability stated in the presentation. AWS and ST Telemedia are cited as anchor operators. The presentation highlighted that land values in the park have increased materially over the last few years, with a cited last land transaction at about INR 210 million per acre.

The strategy is two-pronged. First, continue selling land to data centre operators and target price points of about INR 0.7 billion per acre over the next few years. Second, build 1 GW of powered shell capacity on a build-to-suit basis, largely financed from the land monetisation in the data centre park. On the earnings call, management stated that the powered shell plan could involve incremental cost in 2026 terms of about INR 100 billion to INR 110 billion, and that it expects announcements during FY27, with income beginning in FY29.

Building annuity income beyond data centres

Lodha’s annuity assets are framed under RentCo. The presentation disclosed FY26 annuity income of INR 2.9 billion. It also provided a pipeline across office, retail, warehousing, and industrial assets totalling 8.8 msf, with 3.8 msf completed. As of March 2026, annualized rental income from leased area is shown at INR 3.1 billion, with estimated FY31 annual rental income of INR 10.0 billion for these assets.

The company’s broader stated ambition is 10x growth in annuity income over the next six years. Management positioned the annuity build-out as a stabilizer over cycles and an additional driver of PAT.

Risks management highlighted and quantified

The earnings call contained a few explicit risk acknowledgements. Management said March saw selective deferral of closures due to Middle East tensions, with some impact in NRI demand from the region and in the luxury segment. FY27 guidance assumes the geopolitical situation normalizes by the end of the first quarter.

Management also quantified construction cost pressures. It said construction cost increases were running at about 3% to 5% in select gas-dependent categories such as tiles, paints, PVC pipes, and aluminium formwork. It estimated that if the inflation persists through a full three-year construction cycle, margin impact could be around 1.7%, while a six-month duration would imply a much smaller impact.

Takeaways

FY26 reinforced Lodha’s ability to grow profitably while operating with low leverage. Revenue growth and record pre-sales were accompanied by PAT growth of 24% and a PAT margin at about 20%. At the same time, the company is clearly signalling a shift toward free cash flow acceleration, driven by reduced near-term business development intensity after a large FY26 BD year.

FY27 guidance is anchored in pre-sales of INR 240 billion and embedded EBITDA margin of 32% to 34%, but management’s bigger message is medium-term PAT compounding. The data centre plan at Palava and the broader annuity build-out will be the key strategic variables to watch as Lodha attempts to evolve from a pure development story into a more diversified, annuity-supported earnings profile.