Godrej Properties zooms 11% on strong profits; analysts bullish for FY25

Shares of real estate firm Godrej Properties (GPL) surged 10.7 per cent, hitting its 52-week high at Rs 2,845 per share on the BSE in Monday’s intraday deals. This came after the company showcased decent quarterly earnings for the quarter ending March 2024 (Q4FY24).

Godrej Properties posted a 14 per cent year-on-year (Y-o-Y) increase in its consolidated net profit, reaching Rs 471 crore for the quarter ending March 2024. In the corresponding period last year, the profit stood at Rs 412 crore.

However, revenue from operations saw a 13 per cent Y-o-Y decline, dropping to Rs 1,426 crore from Rs 1,646 crore in the same period of the previous year.

In the fourth quarter, the adjusted earnings before interest tax depreciation and amortisation (Ebitda) declined by 2 per cent Y-o-Y to Rs 717 crore, compared to Rs 729 crore in the previous year’s quarter.

Meanwhile, the company achieved its highest-ever quarterly sales for the third quarter in a row, with a booking value of Rs 9,519 crore. This figure represents a year-on-year growth of 135 per cent, driven by the sale of 8.17 million square feet of area.

Analysts at Kotak Institutional Equities believe that the healthy cash collections led to a net debt reduction in Q4FY24, despite continuing land costs. The brokerage firm said that the management guidance for FY2025 remains strong — Rs 20,000 crore of business development, Rs 27,000 crore (over 20 per cent Y-o-Y) of pre-sales, aided by Rs 30,000 crore of launches and Rs 15,000 crore of collections.

“We are encouraged by the strong showing by GPL, though we believe all positives are captured in the CMP. ‘Sell’ with a revised FV of Rs 1,780 per share,” analysts at Kotak wrote in a result update.

Godrej Properties delivered strong performance with 84 per cent Y-o-Y growth in bookings. In terms of FY24 sales by value, the NCR contributed 45 per cent, MMR 29 per cent while Bengaluru and Pune contributed 11 per cent each.

The Ebit margin stood at 27 per cent in FY24. This will continue to remain in the 25-30 per cent range and is not dependent on the performance of any single market, analysts said.

“We believe GPL will continue to surprise on growth, cash flows, and margins, given its strong pipeline and healthy realisations, which have been the key investor concerns. We reiterate our ‘buy’ rating with an increased TP of Rs 3,000, implying 17 per cent potential upside,” those at Motilal Oswal wrote in a recent report.  

However, with land spends continuing to be high and operating cash flow being patchy, concerns around free cash flow have arisen, believe those at Nuvama Institutional Equities. The brokerage, therefore, maintained its ‘hold’ rating with a revised target price of Rs 2,828.

On Monday’s close, the shares of the company ended 10.85 per cent higher at Rs 2,843.90 per share on the BSE. In comparison, the S&P BSE Sensex ended flat, up 0.02 per cent at 73,895 levels. GPL stock is presently trading at a price-to-earnings multiple of 140 times.