OPEN APP
Home >Markets >Stock Markets >Godrej Properties shares up 6%: exciting launch pipeline, but watch high debt

Godrej Properties shares up 6%: exciting launch pipeline, but watch high debt

The company has approved a resolution for fundraising up to Rs3750 crore though various modes including a qualified institutional placement. (Representational image)Premium
The company has approved a resolution for fundraising up to Rs3750 crore though various modes including a qualified institutional placement. (Representational image)

  • The company, which is seen among the key beneficiaries of the temporary stamp duty cuts in Maharashtra, launched three new projects/phases in Q3FY21. However, to tap into the improving consumer sentiment, the company has planned a slew of new launches.

Mumbai-based Godrej Properties Ltd reported muted earnings in the December quarter inspite of sales improving by 25% year-on-year basis. It's topline and bottom line performance was marred by limited new launches and subdued revenue recognition.

The company, which is seen among the key beneficiaries of the temporary stamp duty cuts in Maharashtra, launched three new projects/phases in Q3FY21. However, to tap into the improving consumer sentiment, the company has planned a slew of new launches.

Also Read | Vaccination drive picks up slowly

In a post earnings conference call, the management said, it aims to launch around 12 projects in Q4FY21 spread across nearly 8million square feet. "We believe that even if half of these launches come through, GPL should be able to beat 4QFY20 sales numbers, given good market momentum. We raise our FY21 pre-sales estimates by 8% to Rs6600 crore, implying 10% growth y-o-y," analysts at Jefferies India Pvt Ltd said in a report on 4 February.

For this, the company is eyeing more fund raising. The company has approved a resolution for fundraising up to Rs3750 crore though various modes including a qualified institutional placement. Though long-term, the management said that it will not shy away from taking net gearing, a key debt metric up to 1 times. In the December quarter, the company's net-debt increased by Rs340 crore sequentially, to Rs3080 crore. It's net gearing at 0.64 times was at a seven-quarter high.

Meanwhile, the management said, that expects profits to improve as the projects acquired/launched in recent years enter revenue recognition from late FY22/FY23.

Reacting to the earnings, shares of the company rose more than 5% on the NSE on Friday to Rs1417. The stock trades at a one-year forward price-to-earnings multiple of 170 times, much higher than peers, shows Bloomberg data. Competitors Sunteck Realty Ltd and Kolte-Patil Developers Ltd are trading at PE of 41 times and 59 times, respectively. According to analysts at Kotak Institutional Equities, for this substantial valuations premium to justify, the company's margins and cash generation from extant projects need to get better.

Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.

Click here to read the Mint ePaperMint is now on Telegram. Join Mint channel in your Telegram and stay updated with the latest business news.

Close
×
Edit Profile
My ReadsRedeem a Gift CardLogout