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2QFY11: PE Transaction, boosts earnings
2QFY11down YoY; but strong on QoQ and UBSe basis Revenues and earnings declined 15% and 26% YoY; but were stronger on QoQ basis with
revenues up 14% and earnings 47% QoQ. Earnings (Rs329m) were also stronger than UBSe (Rs296m); with EBITDA margins healthy at 61% vs.
65% in 2QFY10 and 46% in Q1FY11. We believe 2Q was largely driven by PE transaction in the quarter; as this was operationally/cyclically a weak
quarter with pre-sales of 0.23msf (vs. 0.55msf in 1QFY11) – we expect better 2H performance.
2Q highlights - PE stake sale, new Mumbai project, Mangalore launch As a part of its growth strategy – 1) company monetized 49% stake in
Godrej Woodsman Estate II, Bangalore to PE for Rs450m; and 2) entered into new joint dev agreement (50% rev share) for 0.15msf in Chembur,
Mumbai (launch in 4QFY11/1QFY12). Further, it launched Godrej Avalon in Mangalore (0.69 msf) which further widened its pan-India footprint to 10-
cities.
Key catalysts - Strong launch pipeline, new projects and focus on cash flow 1) Good response to planned launches (~5msf) in Ahd phase-III,
NCR, Chennai, and Kochi over next 6-mts; 2) Announcements on new joint-development deals in Mumbai, Bangalore; and 3) Thrust on cash flows
given its strategy of monetizing assets to maximize return, mitigate risks and subsequently increase scale.
Valuation: Reiterate Buy and PT of Rs956 We base our price target on a 25% discount to our NAV of Rs1,275 (factoring Group MoU land). We see
stock’s recent underperformance as a good opportunity to accumulate; as we believe co offers differentiated, capital efficient model.
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