Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  
Google
Web www.equitybulls.com
Research

| More

Initiating Coverage on Godrej Properties - The housing factory - HDFC Securities

Posted On: 2020-11-27 02:40:33 (Time Zone: Arizona, USA)


Mr. Aditya Makharia , Institutional Research Analyst, HDFC Securities

Godrej Properties Ltd (GPL) is a sectoral bell-weather with an innate capacity to build homes. Over the years, it has metamorphosed into a seamless home manufacturing machine with the shortest production time from land acquisition to approvals to launches and sales. In this journey, it has gained market share and emerged a crucial challenger in the respective micro-markets; it is on its way to becoming a leader. Given strong brand, robust financial capacity and strong execution capabilities, landowners/Tier 2 developers have been partnering with GPL for JV opportunities. The growth journey is expected to crystallise further with the regulatory landscape changing over the years, in favour of organised developers. We believe GPL only constrains itself, and that is its biggest strength or weakness. Given recent run up we initiate coverage on the stock with an ADD recommendation and SOTP of Rs 1,164/sh (40% NAV premium).

- Whilst others want to grab it all, GPL stays focused on residential: GPL has always stressed that it anchors its strategy mainly towards residential developments. The market has been giving premium to mixed-use players with exposure to annuity and residential developments. In between, the capital allocations get jumbled up in office/retail/hospitality and residential. GPL is clear that it would allocate the lion share of its capital to residential, which reflects in strong market share gains over the years in the Top-4 regions of Mumbai, Pune, Bengaluru and NCR. We believe it would continue to dominate these markets and remain developer of choice for buyers, given its strong track record and robust housing demand.

- Regulatory overhaul could consolidate the market among 8-10 developers: Over the past few years, demonetisation, RERA, GST, NBFC crisis and COVID-19 have restricted sectoral funding, resulting in consolidation of market share amongst Top 5-10 developers. GPL's massive expansion has been in sync with the long-pending regulatory overhauls. It has been averaging at 1-2.5mn sqft per micro-market and is well-poised to double the presales over the next four years. Whilst other developers are defocused on residential, GPL has a hawk-eye on residential opportunities, from perspective of both business development (BD) and launches.

- Cash flow to remain mostly negative, BD opportunities to lead to debt build out: Whilst the past three years' BD efforts have started paying off in terms of new launches, GPL may continue to pursue new BD deals. Although a large part of the BD funding may be met with project cash flows, GPL has given net D/E target of 1x, which implies about Rs 20-25bn outlay on land acquisitions over the next four years. GPL maintains a 20% ROE target from FY23/24E. Interest cost for GPL at 7.5% pre-tax (~5% post-tax) reduces the cost of capital and aids accelerated launches in the key markets.

Shares of Godrej Properties Ltd was last trading in BSE at Rs.1110.8 as compared to the previous close of Rs. 1083.1. The total number of shares traded during the day was 42627 in over 2475 trades.

The stock hit an intraday high of Rs. 1122 and intraday low of 1091.25. The net turnover during the day was Rs. 47103803.


Source: Equity Bulls

Click here to send ur comments or to feedback@equitybulls.com


Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only. www.equitybulls.com, its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. www.equitybulls.com or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.





Other Headlines:

Maintain ADD on Symphony - Domestic in line; RoW improving - HDFC Securities

Maintain ADD on Multi Commodity Exchange - Taking a pause; recovery awaited - HDFC Securities

Maintain ADD on DCB Bank - Provisioning cushion emerges ahead of expectations - HDFC Securities

Maintain BUY on Birla Corporation - Margin buoyancy continues - HDFC Securities

ADD on SRF - Returning to normalcy - HDFC Securities

HDFC Securities - Maintain BUY on UltraTech Cement - Solid show!

Ajanta Pharma (Initiating Coverage) - Gearing for the next leap - HDFC Securities

BUY on SBI Life Insurance - Growth returns - HDFC Securities

Kajaria Ceramics (Initiating Coverage) - Galloping ahead - HDFC Securities

UltraTech Q3 FY21 - YES Securities

HDFC Life Q3 FY21 - YES Securities

SBI Life - Q3 FY21 - YES Securities

Aavas Financiers Q3 FY21 - Conference Call Takeaways - YES Securities

Birla Corp Q3 FY21 - YES Securities

ADD on Reliance Industries - Sailed through the tough times! - HDFC Securities

Grasim Industries - Aspiring for strong no.2 position in paints - ICICI Securities

Kewal Kiran Clothing - Better execution with flat EBITDA YoY - ICICI Securities

Mphasis - DXC will continue to be key in the near term - ICICI Securities

HDFC Securities: Indian Chemical Sector (Sector Update) - Steering well through the pandemic!

UltraTech Cement - Earnings upgrade continues; ripe for rerating - ICICI Securities

Multi Commodity Exchange of India - Lower turnover impacted operating performance - Q3FY21 - ICICI Securities

SBI Life Insurance Company - Strong performance, attractive valuations (<2 FY23 P/EV) - ICICI Securities

Biocon Limited - Slow recovery in biosimilars - ICICI Securities

HDFC Life Insurance Company - Not only - but also - about protection - ICICI Securities

DCB Bank - Gradually approaching normalcy - ICICI Securities

Aurobindo Pharma - Approval for 3 products under PLI Scheme - ICICI Securities

Yes Bank - Aggravating asset quality fears outweigh operating performance turnaround - ICICI Securities

JSW Steel - Peak margins expected in Q4FY21 - ICICI Securities

Aavas Financiers - Quality intact; premium to sustain - ICICI Securities

Supreme Industries - Q3FY21 First Cut - ICICI Direct

Polycab India Ltd - Q3FY21 First Cut - ICICI Direct

DCB Bank - Q3FY21 First Cut - ICICI Direct

Q3FY21 Result update - Symphony Ltd. - ICICI Direct

Ultratech Cement - Q3FY21 First Cut - ICICI Direct

Oberoi Realty - Q3FY21 First Cut - ICICI Direct

HDFC Life Insurance - Q3FY21 First Cut - ICICI Direct

SRF Limited - Chemical biz's good performance may continue - ICICI Securities

Multi Commodity Exchange of India - Lower turnover impacted operating performance - ICICI Securities

Q3FY21 Company update - Zensar Technologies - ICICI Direct

JSW Steel - Q3FY21 First Cut - ICICI Direct

Q3FY21 Result update - Biocon Ltd - ICICI Direct

Symphony Ltd - Q3FY21 First Cut - ICICI Direct

Crompton Greaves Consumer Electricals - Q3FY21 First Cut - ICICI Direct

Q3FY21 Result update - Bajaj Finserv - ICICI Direct

Q3FY21 Result update - Bajaj Auto - ICICI Direct

Quant Pick - Hero MotoCorp - ICICI Direct

Company update - Cyient Ltd - Q3FY21 - ICICI Direct

Covid Recovery Pulse - Auto retail taper off in new year 2021 - ICICI Direct

Q3FY21 Result update - Asian Paints - ICICI Direct

Company update - Mphasis Ltd - Q3FY21 - ICICI Direct



Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2020