Buy Godrej Properties Ltd for the Target Rs. 2,520 by Choice Institutional Equities
Key Conference Call Highlights
Industry:
* The management maintained a cautiously optimistic stance on global uncertainty (including developments in the Middle East). While these caused some near-term disruption in March, they could eventually redirect NRI demand to India from markets such as Dubai
* GPL downplayed fears of AI materially disrupting residential demand in techdriven markets, such as Bengaluru, highlighting that office demand continues to remain robust
Operations:
* GPL retained its position as India’s largest residential developer in terms of booking value for the third consecutive financial year
* This is the 5th consecutive quarter in which GPL has delivered more than INR 70.0 Bn of booking value and 11th consecutive quarter in which GPL has delivered more than INR 50.0 Bn of booking value
* Pre-sales FY26 mix: ~60% launches, ~40% sustenance sales
* Construction cost inflation (~5–6%) remains manageable through pricing, limiting margin impact to ~1–2%, supported by strong contracts and pricing power. Overall, EBITDA margin is expected to remain broadly stable, with only minor fluctuation driven by JV mix
* Pricing trend has been reasonably stable in South India and Mumbai. It was slightly stronger in the West; however, the NCR market (excluding Noida) has seen weak traction. Noida was a notable exception owing to favourable demand-supply- dynamics
* The board of directors has recommended a dividend INR 10 per share (200%) for FY26
Business Development:
* GPL plans business development of INR 200 Bn in FY27E
* The level of BD investments is projected to decrease as a percentage of existing projects and operational cash flow. Robust BD momentum in FY26 (+59%) is set to drive a strong launch pipeline in FY27E
Guidance:
* For FY27E, GPL targets pre-sales exceeding INR 390 Bn (up ~20% vs. FY26 guidance) and collections surpassing INR 240 Bn, which is 20% growth each
* The company remains focussed on achieving a 20% Return on Equity (ROE) by FY28E
* FY27E FCF is likely to remain neutral, contingent on BD intensity, whereas in FY28E,the management expects a strong shift to positive free cash flow as multiple projects enter the revenue recognition phase
* GPL has announced a dividend payout for the next year, signalling a shift towards consistent and growing dividends
* Management does not anticipate any significant impact on the demand side as a result of the ongoing tensions in the Middle East, but expects cost pressures that could reduce margins by approximately 0.5%
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