Godrej Properties Ltd has reported a remarkable 283% year-on-year increase in pre-sales for Q1 FY25, reaching INR 8,637 crore from 8.99 million square feet of space sold. This rise follows the launch of new projects worth INR 8,600 crore in key markets like Bengaluru and NCR. For FY25, the company targets pre-sales of INR 27,000 crore and project launches totaling INR 30,000 crore. Despite sequentially lower collections and rising net debt of INR 7,430 crore, Godrej Properties aims to achieve INR 15,000 crore in collections and INR 20,000 crore in business development.
Godrej Properties Ltd has begun the fiscal year 2025 (FY25) with impressive performance, reporting a significant increase in pre-sales or bookings for the June quarter. Pre-sales rose by 283% year-on-year, reaching INR 8,637 crore, following the sale of 8.99 million square feet (msf) of space. This marks the highest quarterly sales the company has recorded in the first quarter.
A key driver of this growth was the launch of new projects valued at INR 8,600 crore, spread over 9.8 msf in regions such as Bengaluru and the National Capital Region (NCR). The company's management remains optimistic about sustaining demand for housing. They are targeting pre-sales of INR 27,000 crore and Project launches worth INR 30,000 crore for the full fiscal year. God's diverse project portfolio, which includes significant developments in Ahmedabad, Mumbai, Pune, Bengaluru, and NCR, helps to reduce the risk associated with concentrating in one area, thus positioning the company for steady growth.
While Q1 FY25 saw collections fall sequentially to INR 3,010 crore, the management insists they can meet their target of INR 15,000 crore for the fiscal year. Additionally, Godrej Properties added two new projects with a gross development value of INR 3,000 crore during this period and aims for total business development of INR 20,000 crore in FY25. This growth strategy includes plans to launch up to 22 msf of projects and phases throughout the year.
Despite these positive indicators, the company faces challenges. Increased land acquisition costs have raised its net debt to INR 7,430 crore, with a debt-to-equity ratio of 0.71 times. Concerns over cash flow and rising borrowing costs, now averaging 7.9%, have emerged among investors. The management acknowledges these challenges but remains committed to improving cash flows to manage debt levels effectively. Balancing the need for further land acquisitions with maintaining manageable debt will be crucial for future growth.
In response to the company's earlier successes, Godrej Properties' stock has increased by 55% in value in 2024 so far. Analysts note that while performance has improved, the stock's valuation seems elevated compared to its business performance. As of August 1, 2024, implied valuations were trading at a premium compared to peers, raising questions about sustainability going forward.
Overall, Godrej Properties is positioned for potential growth in the real estate market. Their expansive project developments and diversified geographical presence create opportunities to navigate challenges and deliver on their ambitious targets. As the company focuses on balancing growth with financial prudence, investors will be watching closely to see if their strategies pay off in the coming months.
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