Buy Godrej Properties Ltd For Target Rs. 2264 - Elara Capital
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Scaling new summits
Highest-ever quarterly sales performance led by strong launches
Godrej Properties (GPL IN) reported quarterly sales of INR 57bn with volume at 4.34mn sqft. Booking value was up 14% QoQ and 76% YoY. Despite the 17% QoQ and 2% YoY drop in sales volume, booking value was robust, primarily led by high realization in NCR market where GPL launched Godrej Aristocrat in Q3. This was GPL's most successful ever launch, achieving a booking value of INR 26.67bn and high average realization of INR 19,700/sqft.
GPL also launched Godrej Ananda in Bengaluru, which achieved good traction resulting in INR 5.74bn booking value. In total, it launched eight new projects/phases in Q3 across five cities. Among regions contributing to sales, NCR posted the highest booking value of INR 33bn, followed by MMR with INR 10bn. For Q3FY24, Godrej recorded a revenue of INR 3,304mn, up 68% YoY but down 4% QoQ. Net profit rose 6% YoY but dropped 7% QoQ to INR 623 mn.
Expect FY24 sales guidance to be surpassed
In Q4, some major projects set for launch are Sector 89 and Noida Sector 146-B in NCR, Kandivali and Vikhroli in MMR and Old Madras Road in Bengaluru. Pre-sales for Q4 may be per current run-rate of around INR 50bn, on track to achieving INR 140bn sales guidance. In 9MFY24, GPL already achieved a sales value of INR 130bn, surpassing 106% of the total booking value for the entire FY23. FY24 pre-sales may demonstrate ~50% YoY growth but long-term, it is targeting a 20% growth rate.
Valuation: Revise to Reduce with a higher TP of INR 2,264
GPL’s sales velocity in four key markets has been healthy and may improve further, led by its strategy to enter other micro markets and given its strong launch pipeline. It continues to implement its robust business development plan, thus the consequent increase in debt levels warrant close monitoring, near term.
GPL is currently trading at 1.37x of NAV. Due to the recent ~23% run-up in the stock in the past three months, we revise GPL to Reduce from Accumulate with a higher TP of INR 2,264 from INR 1,811 based on 1.35x (unchanged) one-year forward NAV and roll over to FY26E.
Please refer disclaimer at Report
SEBI Registration number is INH000000933
