Godrej Properties soars 8% on strong Q4 business update

Shares of Godrej Properties soared 8 per cent to Rs 1,219.40 on the BSE in Monday’s intra-day trade after the real estate company reported highest-ever quarterly and annual sales. The company reported total bookings of Rs 4,051 crore in January-March quarter (Q4 FY23). In entire FY23 booking value grew by 56 per cent year-on-year (YoY) to Rs 12,232 crore.

The stock has bounced back 21 per cent from its 52-week low of Rs 1,005.70, touched on March 29, 2023. During FY23, Godrej Properties underperformed the market and fell 38 per cent, as compared to 3.4 per cent rise in the S&P BSE Sensex.

Godrej Properties in an exchange filing said its sales volumes for the quarter grew by 19 per cent quarter-on-quarter (QoQ) in area terms from 4.42 million sq. ft. to 5.25 million sq. ft. Sales volumes for FY23 grew by 40 per cent in area terms from 10.84 million sq. ft. to 15.21 million sq. ft.

The company added 18 new projects in FY23 with a total estimated saleable area of nearly 29 million sq. ft. and total estimated booking value of around Rs 32,000 crore (i.e. more than double the BD guidance of Rs 15,000 Crore of estimated booking value for FY23). This included 5 new projects with an expected booking value of Rs 5,750 crore in Q4, Godrej Properties said in press release.

The management said sales growth for the year was on the back of both an improving project mix as well as strong volume growth of 40 per cent. The robust sales performance, has translated into record collections growth of 41 per cent to Rs 8,991 crore backed by strong project completions of over 10 million sq. ft, it added.

Analysts at Motilal Oswal Financial Services (MOFSL) raised FY24E/FY25E pre-sales by 23/44 per cent as the brokerage firm said it incorporate recent project additions. With another expected strong year of project additions in FY24, analysts believe the company is on track to achieve its pre-sales target of Rs 20,000 crore by FY26.

While the company continues to provide strong visibility on pre-sales growth with pick up in business development activity, stock performance continues to remain muted, which reflects a concern on profitability. However, with expected improvement in delivery and profitability from 4QFY23, we believe the re-rating triggers are imminent, MOFSL said.

The brokerage firm upgrade Godrej Properties to BUY with a SOTP-based target price of Rs 1,575, indicating a 40 per cent potential upside. Key downside risks to our target price include slowdown in residential absorption, inability to deliver profitability as anticipated, and delay in launching new projects impacting sales growth adversely.