No sluggishness in realty, suggest Godrej Properties’ Q4 results

Company achieved its highest sales in FY18; future pipeline too remains strong

The Godrej Properties stock is showing an uptick of 5.2 per cent in trade riding on strong sales in the March quarter, as the company plans to raise additional funds for expansion. While the company reported strong revenue growth of 21 per cent yearon-year in the March quarter, new booking value in the quarter crossed the ~10 billion-mark for the fourth consecutive quarter.

New sales in FY18 more than doubled to hit ~50 billion — the highest annual sales so far. However, barring the top line, operating performance was impacted by a number of oneoffs. The company posted an operating loss of ~1.1 billion as a consequence of ~1.5 billion of write-offs on Kolkata and Chandigarh commercial projects.

The company took a price cut to accelerate liquidation of commercial property in the two cities. Net profit was up 169 per cent year-on-year owing to rise in other sources of income. The company booked gain on sale of a 50 per cent stake in Godrej Green Homes (Trees project at Vikhroli).

Analysts expect the sales momentum to improve further over the next year-and-a-half as the firm aims at monetising and augmenting its land parcels. Adhidev Chattopadhyay of ICICI Securities believes that the company could register market share gains in Tier 1 cities over the next five years, given its proven brand strength even in a sluggish market like NCR. Here its launches across Gurugram and Noida have seen decent pace of sales even in weak environment.

To fund its various projects, the company has entered into an agreement with Singapore-based Gamnat for raising about ~10 billion at ~783 per share. The funds will be used solely as growth capital to help it accelerate development by entering new micro-markets.

After adjusting for the expanded capital base, analysts peg the target price of the company at ~850 to ~900 a share. Given the recent run up, there is little upside from the current levels. It awaits a better entry point.