Deit Report : Real Estate - Godrej Properties by Elara Capital
Cashing in; repeat performance likely in FY26
Godrej Properties’ (GPL IN) Q4FY25 presales of >INR 100bn beat estimates of INR 78bn, translating into FY25 presales of INR 294bn (GPL’s share at 93%), up 31% YoY. The bigger beat was on OCF print – INR 75bn (estimate: INR 61bn, up 73% YoY) in FY25, reflecting strongly on the execution machinery (completions of 18.4msf, up 47% YoY) and profitability (proforma EBIT margin on presales sustaining at ~26%). Presales guidance of INR 325bn (+10% YoY) and collections of INR 210bn (up ~25% YoY) imply a repeat of the OCF construct (of at least INR 75bn), offering room to beat business development (BD) guidance of INR 200bn while containing leverage levels.
GPL plans to launch projects worth INR 400bn in FY26, with sizeable fast-moving launches front-ended in H1FY25, including Devanahalli (Bengaluru), Sector 39 (Gurugram), Versova (Mumbai), Vastrapur (Ahmedabad) and plotted development in Indore (cumulatively amounting to a pipeline of > INR 100bn). This along with high sustenance sales evident in Q4 is set to sustain the momentum. Overall, we like GPL’s strategy, given: 1) the strong micro market selection, 2) margin-accretive project addition, 3) increasing economic share, and 4) deepening footprints in existing markets and expansion beyond top 6-7 markets. Reiterate Buy.
NCR retains the lead in presales mix, while MMR is closing the gap: Area sold and presales grew 29% and 31%, respectively in FY25. This was aided by 29msf of new launches, amounting to a launch value of INR 366bn. Notably, 12 projects across six markets registered a booking value exceeding INR 10bn. Overall, NCR retained its lead in presales mix at 36%, followed by MMR at 27% and Bengaluru at 17%. The launch pipeline of INR 400bn includes the ~INR 100bn Worli (Mumbai) launch, likely to increase the share of MMR in overall presales mix in FY26. We view upside risks to FY26 presales guidance of INR 325bn, emanating from unbaked launches of Ashok Vihar (NCR) and Bandra project (MMR), amounting to a gross development value of ~INR 200bn.
High cashflow constructs offer room to sustain BD momentum with limited strain on leverage parameters. GPL closed FY25 business development (BD) at INR 265bn, beating guidance by 32%. Notably, all the acquisitions are on an outright basis. The OCF construct of at least INR 75bn underscored by ~25% growth in collection guidance for FY26 offers availability of growth capex and sustaining momentum in business development. Additionally, the leverage parameters of net debt at < INR 100bn (FY25: INR 33bn) supports strong BD in the medium term.
Reiterate Buy with March 2026E TP at INR 3,700: We like GPL’s strategy, given: 1) the strong micro market selection, 2) margin-accretive project addition, 3) increasing economic share, and 4) deepening footprints in existing markets and expansion beyond top 6-7 markets. Our March 2026E TP stands at INR 3,700. The residential business is valued at 12.0x (versus 17.0x) EV/EBITDA (embedded), which is at a ~50% discount to a leading residential pure play that also benefits from a sizeable land reserve.
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SEBI Registration number is INH000000933
