Mahindra Lifespace stock falls 5% after CEO Subramanian’s resignation

Mahindra Lifespace Developers shares opened 5.8 percent lower on February 24, a day after CEO and MD Arvind Subramanian announced his resignation.

Subramanian has been heading the company’s operations since May 2020 and his resignation comes into effect on May 22, 2023.

The company has appointed Amit Kumar Sinha, who has been the Mahindra Group president, Group Strategy, since April 2021, as the new MD & CEO.  Sinha has over 18 years of experience and previously held the role of a senior partner and director with Bain & Company.

On growth path

Ensuring continuity in growth should not be a major hurdle, brokerage firm ICICI Securities said.

The management transition comes at a time when the wheels for growth have been already set in motion and barring any large churn, ensuring continuity in growth plans should not be a major hurdle, it said.

“We retain our buy rating on MLIFE with an unchanged target price of Rs483/share which incorporates recent project additions and includes a premium to NAV of 50 percent considering the company’s strong business development pipeline,” the brokerage said in a research note.

It identified residential demand slowdown and any significant change in growth strategy from management changes or exits key risks.

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The company’s development footprint comprises 32.9 million square feet of completed, ongoing, and forthcoming residential projects in seven Indian cities.

It also has more than 5,000 acres of ongoing and forthcoming projects under development/ management at its integrated developments/ industrial clusters in four locations.

Sinha has laid out three top priorities—delivering Rs 25 billion and Rs 5 billion sales in residential and industrial segments by FY25, accelerating launches and creating maximum value as well as accelerating land acquisition efforts across residential, industrials and other segments, HDFC Securities said. The brokerage, too, has maintained its buy rating on the company.

“Given the tailwinds in the industrial business, the upcycle in the residential business, a robust balance sheet, a trustworthy brand image, and a robust business development pipeline, we remain constructive on MLDL and maintain a buy rating, with NAV-based TP of Rs 521/sh,” it said.

In Q3FY23, Mahindra Lifespace reported a 33 percent year on year rise in consolidated net profit at Rs 33 crore compared. Total income also rose to Rs 198 crore in Q3FY23 from to Rs 33 crore in the year-ago period.

At 11.12 am, the scrip was trading 4.8 percent down at Rs 360.70 on the National Stock Exchange. The share price has fallen 25.8 percent in the last six months and 1.4 percent in a month.