Godrej Properties investors in a happy place on record bookings

Godrej Properties recorded its highest-ever quarterly and annual sales performance during the period under review. In a statement issued today, the company said that sales volumes for the quarter grew 19% sequentially from 4.42 million square feet (msf) to 5.25 msf. Sales volumes for FY23 grew 40% to 15.21msf from 10.84 msf. The management said that the strong growth for the year followed an improving project mix as well as robust volume growth.

Cash collections and project deliveries also touched a new high.

Further, the company added 18 new projects in FY23 with a total estimated saleable area of nearly 29 msf and total estimated booking value of around ₹32,000 crore. This is more than double the business development guidance of ₹15,000 crore of estimated booking value for FY23, said the press release.

According to analysts at Motilal Oswal Financial Services, with another strong year of project additions expected in FY24, the company is on track to achieve its pre-sales target of Rs20,000 crore by FY26. So, the research house has raised its FY24E/FY25E pre-sales by 23-44% after incorporating recent project additions.

A pick-up in business development momentum and improved visibility on bookings, is a positive. However, remember that company’s aggressive land acquisition strategy and elevated debt have weighed heavily on the stock, especially because many peers have been on a debt reduction spree. The worry is that Godrej Properties cost of borrowing could escalate on further transmission of interest rate hikes. Consequently, in the last one year, the Godrej Properties stock has declined 28%. This is double of sector index Nifty Realty’s 14% fall in the same duration. So, management commentary on these aspects would be crucial.