Mumbai: Godrej Properties Ltd, the real estate arm of the Godrej Group, posted a 67.5% growth in net profit backed by robust sales in a challenging environment, the company said on Thursday.
Net profit rose to Rs.32.58 crore from Rs.19.45 crore in the quarter ended 30 September from the year earlier. Total income rose 66.87% to Rs.232.74 crore.
The company follows an asset-light joint development model and has been aggressive with launches this fiscal. The company recently launched Godrej Summit in Gurgaon Godrej Gold County in Bangalore as part of this push.
The Gurgaon project “is the most successful launch this year,” said Pirojsha Godrej, managing director and CEO, while announcing earnings.
The company’s much-awaited Bandra-Kurla Complex commercial project in Mumbai, a joint venture with Jet Airways (India) Ltd, will be launched this month, he said. The company expects demand for commercial space to rise by the time the project is finished.
“We will price it attractively for corporates and by the time the project is fully completed, within three years the demand for office space will be back.” he added.
The total debt on the books of the company is Rs.1,610 crore, making for a debt-equity ratio of 1.08 that’s within the target of 1-1.5.
“We are very happy with our debt to equity ratio, it has considerably come down from two last year,” he said. “But there is always further scope to reduce debt.”
Godrej also said that the second quarter witnessed “better operating cash flow”.
As far as the real estate sector is concerned, he said: “Volume growth needs to come back. It has been down for the last 12 months. It is more disappointing than pricing.”
The company only plans to stick to the residential space. “For us, the focus for new launches will be entirely residential,” Godrej said. “It suits us strategically.”
Analysts backed that decision.
“I feel it is a good decision as Godrej has a good name. Real estate has many corporate governance issues and Godrej is known for its clean management. They should refocus on their core strength of residential properties,” said A.K. Prabhakar, senior vice-president, equity research, Anand Rathi Financial Services Ltd.
Godrej Properties gained 3.96% to Rs.603.30 on Thursday on BSE Ltd. The benchmark Sensex rose 0.3% to 18,561.70 points.