Why Godrej Properties investors are getting cold feet
Godrej Properties Ltd. fell nearly 6% on Thursday on the National Stock Exchange. There are a couple of things that seem to be making investors nervous.
The cause of concern lies in the lacklustre performance of its June quarter (Q1FY24) pre-sales, which witnessed an 11% year-on-year decline, amounting to ₹2,250 crore. The drop was primarily attributed to delayed new launches that adversely affected the bookings. During Q1FY24, the company managed to launch only 1.1 million square feet (msf), but it plans to counter this by launching approximately 19msf in the remainder of FY24.
Godrej Properties has reiterated its goal of achieving ₹14,000 crore of presales in FY24. Although the company demonstrated a robust momentum in its business development by adding five new projects in Q1, with an expected booking value of ₹6,500 crore, rising debt due to increased business development activity has become a cause for investor unease. Net debt rose from ₹3,650 crore as of March 2023 to ₹5,300 crore at the end of June quarter.
Furthermore, the management anticipates further increase in the upcoming quarters. Weak launches leading to lower collections only served to exacerbate the company's woes. “Q1FY24 business development GDV is 43% of overall FY24 guidance of Rs15000 crore and with more new land parcels in the offing along with payments for upcoming launches (Ashok Vihar, New Delhi pending payments of ₹500 crore), operating cash flow generation for the company needs to significantly improve going forward to keep debt levels from rising further," said analysts at ICICI Securities Ltd.
Read more on livemint.com
