GODREJ, OBEROI EYE STRESSED REALTY PROJECTS AMID SLUMP

Godrej Properties and Oberoi Realty are looking to gain market share and buy distressed projects, notwithstanding the slump in real estate, thanks to surplus cash and low debt on their books.

Godrej is prepared to withstand the downturn and capture opportunities arising out of the crisis, Executive Chairman Pirojsha Godrej said in the latest annual report. “The most important opportunity will be market share. Strong business development over the past few years has ensured that our launch pipeline has been the best. We will be ready to launch these projects and gain market share, while most of our peers are focused on liquidating their inventory,” said Godrej.

Though the firm did not disclose the firm’s market share in key regions, it has done bookings of more than ~1,000 crore in Mumbai, NCR, Pune, Bengaluru, and other cities in FY20. Adhidev Chattopadhyay of ICICI Securities, however, said the firm had 6 per cent market share, based on launches in focus cities, and a share of 3.6 per cent in terms of sales.

Chattopadhyay said Godrej Properties may command a 5 per cent share by FY22. “With Godrej Properties having a strong pipeline for the next twoto three years, we expect strong pick-up in volumes for the developer over FY20-22, and expect it to attain over 9 million sq. ft in average annual sales volume over this period,” he said.

Godrej Properties added 19.1 million sq. ft in FY20, and has plans to launch 15 million sq. ft in FY21. “This, in turn, will drive cash flows and earnings growth over the medium term. We are open to strengthening our portfolio if projects become available at distressed valuations,” he said.

Godrej said the company had enough cash to move on. “Our balance sheet is strong with net debt/equity at the end of Q4FY20 at 0.24 to 1. Our equity raise of ~2,100 crore in Q1FY20 has ensured we have surplus liquidity to withstand any temporary shock,” the firm said.

Oberoi Realty also seeks to buy land and increase market share in Mumbai. It is also looking to venture into Delhi-ncr and Bengaluru once the pandemic subsides.

“Market share will increase for a few of us even though the overall market may shrink,” said Chairman and MD

Vikas Oberoi during the Q4 earnings call.

Oberoi Realty has a 90 per cent market share in the Goregaon and Borivali regions of Mumbai, and 30 per cent share in Mulund. Oberoi has among the lowest debt compared to peers. It aims to be a serious office developer after its office lease deal with global investor Morgan Stanley.

However, Chattopadhyay of ICICI Securities expects FY21 to be tough, considering its exposure to the Mumbai luxury residential market and continued weakness in malls/hotels. “H2FY21 could see some green shoots with the expected launch of its Thane residential project, which may drive bookings,” he said.

Oberoi Realty’s consolidated pre-tax profit fell 2.6x to ~39.78 crore in Q1FY21, compared to ~104.24 crore in Q1FY20. Revenues fell 37 per cent to ~126.86 crore from ~200 crore last year.