ICICI Securities upgraded Godrej Properties to ‘Buy’ from ‘Hold’. However, it slashed the target price by 11.5% to Rs 2,515 from Rs 2,842. The upgrade in the rating came on the back of strong sales booking, operating cash surplus, and launch pipeline.
ICICI Securities on Godrej Properties: High sales bookings
The company has recorded strong gross sales bookings worth Rs 101.6 billion in Q4 FY25, which was majorly driven by the new launches in Delhi NCR and Hyderabad. The company has achieved record FY25 sales bookings of Rs 29,400 crore (up 31% YoY), which is 9% higher than its FY25 sales booking guidance of Rs 27,000 crore.
Following this, the brokerage house maintained its estimates of sales bookings of Rs 30,500 crore for FY26 and Rs 31,200 crore for FY27. “Conversion of strong sales bookings which have grown at 55% CAGR over FY22-25 to stronger operating cash surplus (exland/tax/interest) over FY25-27 (INR34.3bn achieved in 9MFY25), remains key for the company’s growth trajectory going ahead,” read a research note.
ICICI Securities on Godrej Properties: Launch of new projects
ICICI Securities added projects with a gross development value of Rs 21,300 crore between April 2023 – March 2024 against its guidance of Rs 15,000 crore, which it stated at the beginning of FY24.
Consequently, Godrej Properties incurred a land capex of Rs 5,400 crore in FY24 compared to an operating cash surplus of Rs 4,300 crore. The company has given guidance for another Rs 20,000 crore of new project additions in FY25 and already exceeded its guidance by achieving Rs 26,500 crore in FY25.
“We estimate land capex of Rs 7,000 crore in FY25 against an estimated gross operating surplus of Rs 6,400 crore and QIP proceeds of Rs 6,000 crore,” said ICICI Securities in a research note.
ICICI Securities on Godrej Properties: Net debt key monitorable point
However, as the company continues to invest in new land parcels to drive sales booking growth, its ability to maintain optimal net debt levels remains a key monitorable. It has a net debt of Rs 3,800 crore as of December 2024.
The share price of Godrej Properties rose 3.6% to an intra-day high of Rs 2,020 in Tuesday’s trade. The rating was also upgraded after the stock corrected 27% in the past three months. The stock has given a return of 1.5% in the last one month. However, it has erased over 36% of investors’ wealth over the past six months. It has fallen more than 24% in the last one year.