Sell Godrej Properties; target of Rs 1,861: ICICI Securities

ICICI Securities is bearish on Godrej Properties has recommended sell rating on the stock with a target price of Rs 1,861 in its research report dated August 01, 2024.

Broker Research

August 07, 2024 / 14:23 IST

sell

ICICI Securitie's research report on Godrej Properties

GPL clocked robust Q1FY25 gross sales bookings of 9msf worth INR 86.4bn, led by 9.8msf of launches for the quarter worth INR 86.4bn. Sales bookings were driven mainly by INR31.6bn of sales from Godrej Woodscapes, Bengaluru, INR 23.8bn from Godrej Jardinia, NCR and other launches during the quarter. Buoyed by the strong Q1FY25 performance, the company is well on track to meet its FY25 sales booking guidance of INR 270bn (INR 225bn achieved in FY24). Operating cash surplus for Q1FY25 stood at INR 9.9bn compared to land capex of INR 19.8bn during the period, leading to net debt levels rising by INR 12.3bn QoQ to INR 74.3bn, as of Jun’24 (net D/E of 0.71x). We model for INR260bn of sales bookings in FY25E and INR300bn in FY26E owing to the company’s strong launch pipeline.

Outlook

Godrej Properties (GPL) clocked strong Q1FY25 gross sales bookings of 9.0msf worth INR 86.4bn, led by 9.8msf of launches for the quarter worth INR 86.4bn. Sales bookings were driven mainly by INR 31.6bn of sales from Godrej Woodscapes, Bengaluru, INR 23.8bn from Godrej Jardinia, NCR and other launches during the quarter. Buoyed by the strong Q1FY25 performance, GPL is poised to meet its FY25 sales booking guidance of INR 270bn (INR 225bn achieved in FY24). We model INR 260bn/INR300bn of sales bookings in FY25E/FY26E owing to the company’s strong launch pipeline. We retain our SELL rating given the stock’s rich valuation of 7.1x FY26E P/B. Our target price is unchanged at INR 1,861 based on 1.4x FY24 NAV. Key risks: Better-than-expected cash flow generation and rise in property prices.

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