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Godrej Properties
Limited
Big Earnings Miss; New
Launch Pipeline Good; EW
Quick Comment – Disappointing F1Q results: GPL
reported F1Q12 results well below our expectations.
Sales were down 60% qoq (3x yoy) and OPM was 15%
(14ppt qoq compression mainly due to low-margin
Kolkata commercial projects), which led to profit of
Rs101mn (consensus: Rs250mn; MSe Rs350mn).
Ahmedabad (28%), Kolkata (50%), and Gurgaon (13%)
were the key contributors to the top line. The company
capitalized almost 90% (~ Rs275mn) of the interest
payments. Sequentially, net gearing increased to 100%
(vs. 87% in Mar-11), primarily due to an increase in
commercial inventory in the balance sheet.
New sales appear sluggish: New sales during the
quarter totaled 0.56msf vs. 3.2msf in F2011. Sales
momentum appeared weak in GPL’s key markets –
Ahmedabad (0.2msf sold in Garden City in F1Q vs.
about 3msf sold in the prior 12-15 months) and Kolkata
(0.07msf sold in Waterside II vs. total available area of
1.2msf, 88% complete).
F2012 dotted with new launch plans: GPL targets
several residential launches in the rest of F2012 (about
4-5msf GPL share) across Chembur, Chennai,
Bangalore (premium product), Hyderabad (JV with
Group), and Mangalore (relaunch). This is in addition to
subsequent launches in Ahmedabad (0.2msf GPL share
already launched in F1Q12) and proposed launch at
Patancheru in Hyderabad (~1msf, conversion of
land-use from SEZ to residential expected soon).
Investment Thesis: We reiterate our EW rating on
GPL in view of its expensive valuation (stock trading at
41x F2012E EPS and 20x F2013E EPS; 12% premium
to NAV vs. sector at 30-50% discount). The current land
bank and pipeline projects (including future projects in
Vikhroli) along with potential upside from the Jet Airways
land deal in BKC (in advanced stage) appear to be in the
price.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Godrej Properties
Limited
Big Earnings Miss; New
Launch Pipeline Good; EW
Quick Comment – Disappointing F1Q results: GPL
reported F1Q12 results well below our expectations.
Sales were down 60% qoq (3x yoy) and OPM was 15%
(14ppt qoq compression mainly due to low-margin
Kolkata commercial projects), which led to profit of
Rs101mn (consensus: Rs250mn; MSe Rs350mn).
Ahmedabad (28%), Kolkata (50%), and Gurgaon (13%)
were the key contributors to the top line. The company
capitalized almost 90% (~ Rs275mn) of the interest
payments. Sequentially, net gearing increased to 100%
(vs. 87% in Mar-11), primarily due to an increase in
commercial inventory in the balance sheet.
New sales appear sluggish: New sales during the
quarter totaled 0.56msf vs. 3.2msf in F2011. Sales
momentum appeared weak in GPL’s key markets –
Ahmedabad (0.2msf sold in Garden City in F1Q vs.
about 3msf sold in the prior 12-15 months) and Kolkata
(0.07msf sold in Waterside II vs. total available area of
1.2msf, 88% complete).
F2012 dotted with new launch plans: GPL targets
several residential launches in the rest of F2012 (about
4-5msf GPL share) across Chembur, Chennai,
Bangalore (premium product), Hyderabad (JV with
Group), and Mangalore (relaunch). This is in addition to
subsequent launches in Ahmedabad (0.2msf GPL share
already launched in F1Q12) and proposed launch at
Patancheru in Hyderabad (~1msf, conversion of
land-use from SEZ to residential expected soon).
Investment Thesis: We reiterate our EW rating on
GPL in view of its expensive valuation (stock trading at
41x F2012E EPS and 20x F2013E EPS; 12% premium
to NAV vs. sector at 30-50% discount). The current land
bank and pipeline projects (including future projects in
Vikhroli) along with potential upside from the Jet Airways
land deal in BKC (in advanced stage) appear to be in the
price.
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