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Godrej Properties (GPL) reported strong performance across several key metrics. The company achieved sales bookings of Rs. 86.37 billion, representing a 283% year-over-year (YoY) increase, and collections reached Rs. 30.12 billion, indicating a 27% YoY growth. Operating cash flow increased by 737% YOY to Rs. 9.88 bn, and the company delivered 2.7 million square feet, down 45% YoY and 55% QOQ. This was the second consecutive quarter in achieving highest amount of presales (mnsf).

* Under the new agreement between Godrej & Boyce (G&B) and GPL, GPL will continue to serve as the development manager for the Vikhroli land owned by G&B. In terms of project additions, GPL introduced 2 new projects with a total Gross Development Value (GDV) of Rs. 30 billion in Q1 FY25. They added a premium residential development in Hinjewadi Pune and high street retail of 2.2 mnsf spread across 11 acres with GDV of Rs.18 bn, strategically located near the upcoming Megapolis Metro Station and offers good connectivity to Major IT hubs in Hinjewadi. They also added High-end residential development in Thanisandra, Bengaluru of 0.9 mnsf spread across 7 acres with GDV of Rs.12000 mn located in a high-potential area along Thanisandra Main Road, with the land connecting to the Airport. The area rapidly growing hub for commercial and residential real estate in North Bengaluru.

* We anticipate that the momentum of project additions will continue in the coming years, supported by an increase in launches in regions outside the Mumbai Metropolitan Region (MMR), such as the National Capital Region (NCR), Bengaluru, Hyderabad, Pune, and others. In terms of Q1FY25 Presales of Rs. 86370 Mn, Area wise Contribution is NCR - 40%, Bengaluru- 36%, MMR- 16%, Pune5% and Others were 4%. Since the last 6 years, CAGR has been- Presales - 33.5%, Sales Volume- 18%, Collections-32%, OCF- 52% and ASP- 14.3%.

* In Q1FY25, GPL did pre-sale of Rs.8.99msft (+300% YoY/+10% QoQ) which was largely supported by NCR, Bengaluru and MMR. Booking value increased by 283% YoY and decreased 6% QoQ to Rs.86.37bn and collection grew by 54% YoY and decreased 36% QoQ to Rs.30.12bn on the back of strong launch pipeline and inventory in these markets. We expect GPL to maintain the growth maintain in the coming quarters as well. Management expect Cash flows to grow by 50% CAGR supported by high quality sales in FY24 which should lead to Rs. 150bn in collections in FY25. Cash flows to support BD and they have no plans of raising capital. In the coming years the company is projected to launch a pipeline of Rs.300bn with region wise contribution being-MMR-32%, NCR31%, Bengaluru-16%, Pune-12% and remaining from the rest of India.

Outlook & Valuation: As real estate sector in India continues to hold its growth momentum post Covid backed by aspiration to own a home, rising per capita income and change in perception to deal with reputed over unorganized players we believe Tier-I developers will be the key beneficiary of this tailwind. GPL, post family arrangement on Vikhroli land, now there is more certainty on that piece of land which will help the company to fast track the launches from that land parcel. Despite a high base, they are confident of achieving infact outperforming their guidance of pre-sale of Rs.270bn, collection of Rs.150bn and deliveries of 12.5 mnsf. Management is expecting to achieve this milestone by maintaining the gearing ratio to less than 0.5x and without any fund raise. We like to retain our positive view on the stock with a TP of Rs. 3503.3 (6.5x of Price to Book of FY26E BPS.)

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