Hold Godrej Properties; target of Rs 520: Edelweiss

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Edelweiss' research report on Godrej Properties

Revenue at INR 2.5bn (down 18% YoY, 42% QoQ—first‐time recognition from Trees‐Ph2 in Q4FY17) was driven by POCM‐based revenue recognition in ongoing projects. It reported EBITDA loss of INR 183mn due to higher marketing expenses on new launches during the quarter. Other income of INR 964mn included INR 570mn from sale of its subsidiary ‘GPL Investment Advisors’.

Outlook

While the sharp demand uptick in key markets, price increase and faster new project additions pose key upside risks, demand slowdown, slow new launches and delays in selling balance commercial inventory are key downside risks. At CMP, the stock trades at 18% discount to our FY18E NAV of INR 612. We believe the stock is fairly valued and offers limited upside from current level. Hence, maintain ‘HOLD’.

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