Godrej Properties Rating: Buy-A robust show by firm in the final quarter

Godrej Properties (GPL) logged its best-ever pre-sales in Q4FY21/FY21 with bookings at Rs 26.3/67.3 bn, up 10% y-o-y/14% y-o-y. The company launched seven projects in Q4FY21 (11 in FY21). Collections totalling Rs 20.4 bn in Q4FY21 are also the highest-ever, but ~Rs 4.8 bn of capex led to net cash outflow. Management expects pre-sales to grow in FY22 in spite of the pandemic.

We believe GPL is well placed to benefit from the revival in housing demand and industry consolidation. Factoring in the recent QIP, we are tweaking the target price to Rs 1,526 (from Rs 1,544) while rolling forward the valuation to September 2022e.

Bookings rise as launches pick up: GPL clocked new sales of ~Rs 26.3 bn (up 10% y-o-y, 77% q-o-q) in Q4FY21 aided by seven project launches during the quarter (contributed 58% to bookings). FY21 pre-sales came in at Rs 67.3 bn (up 14% y-o-y). New launches contributed around a third of the pre-sales during the year. Project launches during FY21 stood at 11 (17 in FY20). The company has a healthy launch pipeline of ~12.3msf for FY22. We believe the pandemic will impact sales velocity in the near term, but expect recovery in H2FY22.

Collections improve; fund-raising fortifies balance sheet: Collections improved to Rs 20.4 bn in Q4 (Rs 12.6 bn in Q3FY21); operating cash flow rose to Rs 7.9 bn (Rs 4.5 bn in Q3FY21). Aided by QIP proceeds of ~Rs 37 bn, the company ended FY21 with a net cash position of Rs 5.8 bn (net debt of Rs 30.8 bn in Q3FY21); net debt to equity stands at negative 0.1x.

Outlook: Healthy long-term prospects– We believe launches and sales trajectory will be key stock catalysts. We build in recent QIP and maintain ‘BUY/SO’.