Target: ₹1,215

CMP: ₹1,425.90 

Godrej Properties (GPL) clocked Q1 FY23 gross sales bookings of ₹2,520 crore, owing to better-than-expected response to the two large launches in Mumbai which contributed ₹950 crore of sales value. For the remainder of FY23, GPL has a strong launch pipeline and expects to cross over ₹10,000 crore of FY23E sales bookings. While headline sales numbers may continue to impress, with just ₹20 crore of operating surplus generated in Q1 FY23 and fresh land spend of ₹540 crore, GPL’s net debt increased by ₹490 crore quarter-on-quarter to ₹960 crore.

The company has announced changes to its leadership team, effective January 1, 2023. Gaurav Pandey, who is currently the CEO for of the North Zone of GPL, will take over from Mohit Malhotra as MD and CEO of GPL. As per the company, under his tenure as CEO of GPL’s North Zone, Pandey has made the North Zone as the fastest and most profitable zone at GPL. We believe that this augurs well for continuity in the company’s business strategy and culture going forward.

With large land acquisitions lined up in FY23 (including one large project with potential GDV of ₹5,000 crore), operating cash flows will be the key monitorable, going forward, to keep debt levels in check.

To combat cost push inflation, the company has taken further hikes of 3-4 per cent in Q1 FY23 (price hikes of 5-7 per cent were taken in Q4 FY22). As per the company’s management, recent mortgage rate increased in housing loans by 90-100 bps and further expected hikes in FY23 are not expected to hurt demand.