INSUBCONTINENT EXCLUSIVE:
Deutsche Bank Research has a buy call on Godrej Properties with a target price of Rs 1,000.
The current market price of Godrej Properties is
Rs 634.85.
Time period given by Deutsche Bank Research is one year when Godrej Properties price can reach the defined target
Properties ( GPL) booking value growth of 152 per cent YoY - the current fiscal is tracking comparatively soft
Quarterly area sold declined 31 per cent YoY to 1.07 msft
The booking value of Rs 8.07 bn is 40 per cent lower YoY
On a two year basis, though, the 1H area sold and booking value have increased at a CAGR of 30 per cent and 28 per cent respectively
Management attributed the decline to regulatory delays and maintains the start of the year planned launch pipeline
During the first half, GPL has launched three projects and the plan is to launch seven new projects into 2H FY.
Accounting transition led
volatile revenue and profit headlines: GPL has transitioned to the new Ind AS accounting standard
2Q FY19 revenue, and PAT were Rs 3.9 bn and Rs 206 mn respectively
Under the new - project completion revenue recognition accounting - reported financials are expected to remain volatile, thereby increasing
the relative importance of sales momentum and cash flow statement for investors We have reduced our current year earnings estimates driven
by this transition to a new accounting standard and weak quarterly earnings.
Cash flows momentum improves further: The strong sales momentum
last fiscal is getting reflected in cash flows momentum
The net cash flow is led by a 50 per cent YoY increase in cash inflow and a 42 per cent YoY increase in operating cash outflows
Company's net debt to equity ratio remains comfortable at 0.6 times and is well positioned to capitalize on the opportunities triggered by
the recent credit market developments
The residential sales momentum is showing signs of a gradual bottoming out.
