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ICICI Securities
Godrej Properties (Sell)
CMP: ₹1,113.3
Target: ₹772
Godrej Properties is a real estate company. The company is engaged in construction and real estate development. The company focusses on developing residential, commercial and township projects spread across approximately 11.89 million square meters in over 10 cities.
Godrej Properties’ (GPL) has acquired a 27 acre land parcel on outright basis in Ashok Vihar, New Delhi, from the Railway Land Development Authority (RLDA). Against a reserve price of ₹1,280 crore, GPL will pay ₹1,360 crore for the land in a staggered manner over FY20-27E in equal instalments. GPL’s share of saleable area is 3.28 million sq.ft. which works out to a land cost of ₹4,143/per sq.ft. (psf) Assuming a launch price of ₹15,000/psf, construction cost of ₹6,000/psf and development in two phase over FY21-29E, we arrive at post-tax project IRR of 23 per cent and NPV of ₹410 crore (₹16/share) owing to the staggered land payment for this land.
We retain our ‘sell’ rating with a target price of ₹772/share as we have already assigned a 30 per cent business development premium to our NAV (net asset value) to arrive at our target price.
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