ICICI Securities: Godrej Properties - Key Beneficiary Of Consolidation, Rich Valuations   

ICICI Securities Report

Godrej Properties’ FY20 annual report highlights the company’s aggressive intent to grow its volumes and pursue business development in a stressed market. We believe that GPL with its strong execution track record, healthy balance sheet (cash reserves of Rs 25 billion as of March 2020) and counter-cyclical business development strategy will emerge stronger over the medium-term. We revise our target price for GPL to Rs 826 per share (earlier Rs 721) factoring-in recent project additions and higher premium to net asset of 30%.

As of March 31, 2020, GPL has pending gross customer collections of Rs 115 billion from sold inventory across projects and has over 12 million square feet of gross unsold inventory in its ongoing projects which we estimate to be worth between Rs 80 to 90 billion. In addition to this, GPL has 15 msf of planned launches in FY21 which may be worth approximately Rs 120 billion. Hence, GPL has potential gross collections of Rs 315 to 325 billion over FY21-24E. While Covid -19 may lead to near-term impact on collections, we believe that GPL can scale up to an annual collection run-rate of Rs 80 billion over the medium term by FY23-24E.

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