Q3FY23 Review: Godrej Properties: Robust operational performance

3 Feb 2023 , 12:27 PM

GPL reported highest-ever presales of Rs32.5bn vs Rs15bn YoY. 9MFY23 presales at Rs81.8bn is up 77% YoY, and is well ahead of the Rs100bn guidance for FY23. Cashflows were healthy, with gross collections at Rs21.5bn (up 14% YoY). OCF margins came in at ~26%. GPL’s net debt at Rs25.9bn was up Rs12bn QoQ, due to the highest-ever land capex at Rs13.7bn. The company said it took price hikes of 1-2% in MMR and 4-5% in Bangalore/NCR regions, during the quarter. 

The launches of 2.9msf were all in the new phases of existing projects. GPL has also had the best performance in business development YTD, with the addition of projects that have development potential of >Rs275bn, aimed at achieving 20% Cagr in presales over next few years. Reported financial performance in the P&L was weak, though mgmt is guiding to a very strong Q4 with >7.5msf to be delivered.

P&L performance in Q3 continued to be impacted by weak revenue recognition (1.7msf completed). Mgmt guided to >10msf of completions for FY23, implying >7.5msf in 4QFY23 and sustain the momentum on annual basis. Hereon, GPL expects steady improvement across its key parameters – bookings, cashflows and reported profitability.

Improvement in execution and reported profitability will be key triggers, in analysts of IIFL Capital Services’ view. They retain ADD with a target price of 1,500 (at 50% premium to NAV).