Launch trajectory key for Godrej Properties to regain lost glory
- Godrej Properties' management expects to cross over Rs10,000 crore of sales bookings in FY23. While this target looks achievable, given the usually low inventory with Godrej Properties, supply will be a constraint, analysts
Mumbai-based real estate developer Godrej Properties Ltd saw record-high sales bookings in the March quarter of financial year 2022 (Q4FY22). Pre-sales rose 23% year-on-year (y-o-y) to ₹3,248 crore, highest ever in a quarter. This robust performance was aided by nine project launches during the quarter. Consequently, it closed FY22 on a strong note with pre-sales at Rs7,861 crore, up 17% y-o-y.
With that, the best of sales performance is over for Godrej Properties, at least for now. Hereon, trajectory of new launches would be a crucial parameter to watch out for, say analysts. Investors would reckon that delayed approvals resulted in slower launches for Godrej Properties in FY22. This was one of the factors that dampened sentiment towards the stock.
In the last one year, the Godrej Properties stock rose around 24%, lagging behind benchmark index Nifty Realty’s 45% returns.
There is no like-to-like comparison among real estate companies due to the sharp variance in their project portfolios. Yet, some of the listed companies having exposure to the Mumbai region, such as Macrotech Developers Ltd (Lodha) and Prestige Estates Projects Ltd, saw pre-sales of Rs9,024 crore and Rs10,382 crore in FY22, respectively. Little wonder then that their shares have significantly beaten the Godrej Properties stock in the last one year.
“Market leadership among listed peers was among the key reasons for Godrej Properties’ premium valuations—though several others have ramped up their sales performance resulting in the relative under-performance of Godrej Properties in recent years,” analysts at Kotak Institutional Equities said in a report on 4 May.
For FY23, the company has a launch pipeline of 21.4 million square feet (msf) out of which 10.3msf is from new projects and 11.1msf from new phases in existing projects. The company’s management expects to cross over Rs10,000 crore of sales bookings in FY23. While this target looks achievable, given the usually low inventory with Godrej Properties, supply will be a constraint, analysts at Jefferies India Pvt. Ltd said in a report.
Godrej Properties continues to focus on its asset-light model of jointly developing residential projects. According to the company’s management, new business development picked up pace in 4QFY22 and accounted for around 54% of the project addition in FY22. Further, the management has guided for a strong outlook on new business development deals in FY23, especially in the Mumbai region where many deals are in final stages of approval, the management said.
Analysts at Antique Stock Broking Ltd are enthused by management's plans to enhance its new project addition strategy. However, they caution that striking deals at favourable valuation during a strong housing upcycle, is a challenge and will remain a key monitorable for investors in this stock.
Meanwhile, in a bid to protect margins from raw material inflation, the company has taken price hikes. The management said it saw a cost inflation of around 5% on its sales price and raised prices by around 5-7% across its portfolio.
Catch all the Business News , Market News , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
- Top Gainers
- Top Losers
- 52 Week High