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Godrej Properties Limited (GODR.BO)
Research Tactical Idea
We believe the share price will fall in absolute terms over the next 15 days.
This is because the stock has traded up recently, making short term valuation much less compelling. The stock is up about
17% over the past 2-3 weeks, likely on anticipation of the BKC (Mumbai) project finalization with Jet Airways. We believe
that the run-up is exaggerated due to self-occupancy constraints (Jet Airways to mandatorily occupy a substantial portion)
and likely front-ended cash outflow from Godrej Properties to Jet Airways. In addition, Godrej Properties has announced
definitive joint development agreements on two projects with Godrej Group Company in Thane and Hyderabad, but these
are already factored (~3%) in our forward NAV of Rs.708. Presently trading at 42x F12 EPSe and 14% premium to NAV
(sector at 30-50% discount), we expect the stock to correct in the near term.
We estimate that there is about a 70% to 80% or "very likely" probability for the scenario.
Estimated probabilities are illustrative and assigned subjectively based on our assessment of the likelihood of the
scenario.
Stock Rating: Equal-weight
Industry View: In-Line
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Godrej Properties Limited (GODR.BO)
Research Tactical Idea
We believe the share price will fall in absolute terms over the next 15 days.
This is because the stock has traded up recently, making short term valuation much less compelling. The stock is up about
17% over the past 2-3 weeks, likely on anticipation of the BKC (Mumbai) project finalization with Jet Airways. We believe
that the run-up is exaggerated due to self-occupancy constraints (Jet Airways to mandatorily occupy a substantial portion)
and likely front-ended cash outflow from Godrej Properties to Jet Airways. In addition, Godrej Properties has announced
definitive joint development agreements on two projects with Godrej Group Company in Thane and Hyderabad, but these
are already factored (~3%) in our forward NAV of Rs.708. Presently trading at 42x F12 EPSe and 14% premium to NAV
(sector at 30-50% discount), we expect the stock to correct in the near term.
We estimate that there is about a 70% to 80% or "very likely" probability for the scenario.
Estimated probabilities are illustrative and assigned subjectively based on our assessment of the likelihood of the
scenario.
Stock Rating: Equal-weight
Industry View: In-Line
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