JM Financial's research report on Godrej Properties
GPL reported robust 4Q operational performance with pre-sales at INR10bn which was driven by Sohna Road project and sustenance sales. However reported margin was impacted by INR 1.5bn write-off taken in legacy commercial assets (Kolkata /Chandigarh). With improvement in 4QFY18 operations, GPL has achieved a pre-sales of 6.3msf/INR 50.8bn for FY18. Net debt declined by INR2bn during the quarter as company collections improved to INR 12.8bn (from INR 9bn in 3QFY18). Company is planning to raise INR 10bn through preferential issue resulting in 5.5% dilution. We believe the raised capital will enable company to increase business development activity and have higher interest in JV projects. Company has added 6msf projects in portfolio during the quarter. Quick turnaround of portfolio will enable the company to tap market demand as competitors adjust to new operating conditions.
Outlook
We continue to monitor margins from new launches while demand slowdown remains key risk. Maintain BUY with a TP of INR880.
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