Godrej Properties IPO fully subscribed; should you invest?

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Godrej Properties IPO fully subscribed; should you invest?

The initial public offering (IPO) of Mumbai based Godrej Properties has been fully subscribed on the first day of issue opening. Its issue is of 9,429,750 equity shares of Rs 10 each and price band is at Rs 490-530 per share. The issue will close on December 11, 2009.

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The initial public offering (IPO) of Mumbai based Godrej Properties has been fully subscribed on the first day of issue opening. Qualified institutional investors'  portion got subscribed 1.5 times, reports CNBC-TV18. Its issue is of 9,429,750 equity shares of Rs 10 each and price band is at Rs 490-530 per share. The issue will close on December 11, 2009.

The company has already roped in anchor investors and collected nearly Rs 90 crore from them at Rs 530 per share.

Experts believe that the issue looked expensive at price band of Rs 490-530 and advised to look at other stocks in same sector in secondary market. Investment Advisor, SP Tulsian is not impressed at all with Godrej Properties' IPO. Manish Bhatt of Prabhudas Lilladher said Godrej Properties looked highly priced at issue price, so one should avoid. Sanju Verma, CEO of Institutional Business at Proactive Universal Group said Godrej Properties' IPO looked expensive and would prefer Peninsula Land. 

SP Tulsian

"I am not impressed at all with Godrej Properties' IPO. For example for the six months ending September 2009, the company has posted a profit after tax (PAT) of Rs 48 crore on topline of Rs 125 crore, which has come from the sale of long-term investments to the extent of Rs 58 crore. That means they have not earned a single rupee from their core business."

He further said, "If you take the comparative performance of Peninsula Land or maybe Marathon Nextgen Realty, which have good presence in Mumbai for the quarter-ended September, have posted a PAT of Rs 85 crore and Rs 40 crore. So firstly for their core business you are not seeing these kind of profits, same bottomline has contributed largely by long-term investment sale in FY09 also."

"And if you take their overall market capitalization which is likely to be at Rs 3,700 crore you have so many companies available and at a marketcap of Rs 1,000-2,200 crore in which I will include Peninsula Land, Brigade Enterprises, Mahindra Lifespace and Marathon Nextgen Realty-all these companies have been posting very good profits. They have a very good presence in their respective field because all these builders are termed as realty developers. They have been giving quality. So honestly I am not convinced when you have umpteen opportunities available in the secondary market and so many issues having lined up. Honestly I don't see how one can really get convinced with a valuation of Rs 490-530 price tag for this company", he said.