Hold Godrej Properties; target of Rs 520: Edelweiss

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Edelweiss' research report on Godrej Properties
Godrej Properties (GPL) has entered into agreements to develop 2 new residential projects in Gurgaon and Bangalore, further expanding its footprint in these key markets. We perceive good prospects for these projects and estimate NAV of INR3 for the Gurgaon project and INR1 for the Bangalore project. We expect the company to expand its development portfolio via sustained new project additions, which cumulatively should help grow GPL’s NAV meaningfully. However, as most positives are currently priced in, we see limited upside for the stock. Maintain ‘HOLD’.

Outlook

We expect GPL to continue to expand its project portfolio in its focus markets of Mumbai, Pune, Bangalore and NCR. Post RERA, the company should benefit from smaller developers looking to tie up with prominent ones to ensure better sales momentum and timely completion. In our view, GPL’s new project pipeline, prospects of portfolio expansion (we have factored ~15msf over FY18), strong brand name and tailwinds from RERA & affordable housing incentives are largely priced in. Hence, we maintain ‘HOLD/SP’. At CMP, the stock trades at 15% discount to our FY18E NAV of INR612.

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