Lodha Developers (LODHA)

FairStock Score: 71/100 — STEADY

Score breakdown: P/E: 1/3 · ROCE: 1/2 · Growth: 1/2 · Dividend: 0/1

Key Financials

Strengths

• Sales growth 19.25%, profit growth 33.25%, and 5-year revenue CAGR of 20.39% show strong compounding
• ROE 16.56% and ROCE 15.62% with debt/equity of 0.45 indicate reasonable capital efficiency and balance sheet discipline
• Positive free cash flow of ₹1,476 Cr and Piotroski F-Score of 8/9 suggest earnings quality
• Promoter holding of 71.85% aligns management with minority shareholders

Concerns

• Valuation is extreme: P/E 29.54, P/B 4.24, PEG 7.65, EV/EBITDA 125.78, with DCF value ₹150.72 and Graham Number ₹393.63 far below price
• Altman Z-Score of 2.22 sits in the grey zone, implying some balance sheet vulnerability
• Dividend yield of only 0.43% means no income support while waiting for growth
• Margin of safety is deeply negative at -151.06% relative to Graham Number

AI Analysis

At ₹856.15, Lodha is anything but cheap: P/E of 29.54, P/B of 4.24, PEG of 7.65 and EV/EBITDA of 125.78. Graham would not need the Graham Number of ₹393.63 or the DCF value of ₹150.72 to tell him that the market is paying for perfection. The negative margin of safety of -151% screams caution. Still, the business is growing well. Sales are up 19.25%, profits up 33.25%, and the 5-year revenue CAGR of 20.39% shows consistency. The latest quarter delivered ₹4,673 Cr of sales and ₹958 Cr of net profit. ROE of 16.56% and ROCE of 15.62% are respectable, and debt/equity of 0.45 is manageable for a developer. Free cash flow of ₹1,476 Cr plus a Piotroski F-score of 8/9 tell me earnings have some quality. Promoter holding of 71.85% is another plus. But I cannot ignore the Altman Z-Score of 2.22, which is in the grey zone. For a business tied to real estate cycles, a modest downturn could hurt. Dividend yield of only 0.43% means no income cushion. This is a fast grower, and a high-quality one so far, but the price embeds years of continued 20-30% compound growth. Even a small miss could compress the multiple sharply. In Buffett's language, the business may be wonderful, but the price is not. I would keep it on my watchlist, not buy it at today's levels. My discipline demands a margin of safety; Lodha currently offers none.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer