Multibagger Godrej Properties- 4 key reasons why Jefferies sees more than 18% upside for the stock
Stock Market Today- Godrej Properties share price has more than doubled in last one year giving multibagger returns to the investors. The stock remains in news on strong sales numbers seen in FY24. Here are 4 key reasons why Jefferies sees more than 18% upside for the stock
Stock Market Today: Multi bagger Godrej Properties share price has more than doubled in last one year giving multi bagger returns to the investors. The stock remains in news on strong sales numbers seen in FY24.
As per release by Godrej Properties in Q4 of FY24, Godrej Properties' bookings increased 135% YoY to exceed ₹9,500 crore. This is the greatest quarterly sales figure that an Indian real estate developer with a public listing, that has ever disclosed. Godrej Properties said that this was accomplished by selling 5,331 residences totaling more than 8 million square feet.
Early land purchases and Hyderabad's admission suggest FY25 for Godrej Properties may witness growth over a strong base, said analysts at Jefferies India Pvt Ltd. The average selling price increased by 55% compared to FY22–24, while Godrej Properties rate increased by 30% to ~83%. As a result, Jefferies anticipates significantly greater margins.
Here are 4 key reasons why Jefferies sees more than 23% upside for the stock-
Strong Sales Performance- Post strong sales growth, momentum should continue in FY25. Analysts at Jefferies said that strong new launches in its important markets of NCR (Rs3000 Crore Zenith Gurgaon) and MMR (Reserve, Kandivli, MMR, Rs. 2800 Crore). Good pre-sales for FY24 in MMR (Rs6500 Crore), Pune (more than Rs2500 Crore), and NCR (Rs10,000 Crore) should place Godrej Properties among the top developers in these significant markets.
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Land Banking has remained timely- Godrej Properties has added 36 projects as a result of accelerated business development over the past three years. Godrej Properties added projects mostly through the buy-out strategy. Twenty of these projects have now been launched, and many have seen their final pricing rise by a large margin (10–40%) as a robust residential cycle began.
Expected to maintain sales run rate in near term- Godrej Properties has entered the city of Hyderabad, adding another potentially sizable market. Jefferies estimates that Godrej Properties has more than Rs45,000 Crore worth of inventory to offer at the freshly acquired properties. Although Jefferies is awaiting word on launches and pre-sales for FY25, they think that the run-rate for pre-sales in FY24 might be surpassed in FY25.
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Margin Improvement ahead
The top three projects in FY23 and the four largest projects for Godrej Properties by pre-sales in FY24 are those that have their own land, which is indicative of a notable rise in Godrej Properties own stake in projects to 80% plus in recent times, sadi Jefferies. Timely land purchases and a slightly premium mix over the last few years, along with a robust pricing environment, suggest that P&L margins should rise significantly over the next three to four years, toward the range of 15 to 18%, expect analysts at Jefferies.
Target price upgraded
In Light of the above mentioned reasons, Jefferies has raised its FY25 and FY26 pre-sales estimates by 25% and 19% respectively. Earnings boost due to new launches will show up in P&L statement from FY28 onwards. As margins increase in the direction of the higher range's midpoint, the increased sales run-rate has led to increase In Jefferies target price to RS 3175 for stock trading at around 2675 levels indicating 18-19% upside for the stock trading at ₹2675 levels.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions
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