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Target: ₹1,575
CMP: ₹1,227.25
Godrej Properties (GPL) reported a four-fold jump in sales bookings to ₹8,000 crore during FY17-22, driven by over 100msf of project additions. GPL’s market share expanded to 8 per cent in CY22 from 2 per cent in CY16 and it was one of the biggest beneficiaries of industry consolidation.
With a strong visibility on consolidation, GPL raised ₹6,800 crore over FY19-21 but a large part of it remained undeployed until FY22. While the company reported a strong scale-up in project pipeline and sales bookings, subdued profitability and declining OCF trend failed to justify its premium valuation.
In Jan’22, we initiated coverage on GPL with a Neutral rating, citing: its expensive valuation, which incorporated strong business development and no near-term catalysts for improvement in profitability, which has remained a key concern.
The stock has corrected about 40 per cent since then and with record project additions (GDV of ₹30,000 crore) in FY23, the valuations have become attractive.
During our recent meeting with GPL’s management, Pirojsha highlighted that strong business development momentum is expected to continue in FY24 and the company remains on track to deliver improved profitability.
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