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Improving cash flows. GPL’s cash flow improved in 3QFY15 as its increase in debt was lower than the amounts it paid for stake buy backs in projects. Sales were low, as it did not launch any new projects (expected). Management remains confident of launching three new projects in 4QFY15. For better operations, the sales of legacy residential projects need to increase. Although its business is improving, we believe GPL still trades at a premium to its fair value. Maintain REDUCE
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3QFY15 results review – improving cash flows GPL’s revenue of `5.2 bn was higher than our estimates primarily because of the sales at its BKC project in Mumbai. Godrej Summit, Gurgaon, started recognizing revenue in 3QFY15. EBITDA margins were lower than our estimates, again because of BKC, which is a lowmargin project and contributed to a higher proportion of revenue and cost. Godrej Summit phase-1 is also a low margin project. GPL booked around `750 mn of interest through project expenses, higher than any other quarter. Project cash flows improved further in 3QFY15, which is significant. Although debt increased by `1.3 bn, it is lower than the amount GPL spent for stake acquisitions, mainly because of strong sales over the past four quarters from high-margin projects. 3QFY15 operations review – no new project launches results in lower sales, no surprise GPL sold 0.7mn sq. ft of residential and commercial projects in 3QFY15. Sales volumes dropped 50% as it had no new launches. MMR contributed to around 36% of its sales followed by Bangalore and Pune. Unlike its other projects in the south, both its DM-fee projects in Bangalore are selling consistently. GPL confident of three new launches in 4QFY15; we await management commentary While GPL has delayed the launch of its residential development at Trees, Vikhroli (Mumbai), it remains confident of launching three new projects in 4QFY15, of which two are in Mumbai. If launched, we expect a strong response for its Chembur (Mumbai) launch; the other project is a DM whose launch has been delayed due to approvals. GPL’s JV in Keshavnagar, Pune, will be its largest launch in the city so far. Given its strong parentage, debt is still not a concern; however, it is growing. We await the management’s commentary on its stance on absolute debt (most of it is towards commercial projects), new-acquisition spends (high cash on books) and the sales momentum at its legacy residential projects.
LINK
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily28012015po.pdf
Improving cash flows. GPL’s cash flow improved in 3QFY15 as its increase in debt was lower than the amounts it paid for stake buy backs in projects. Sales were low, as it did not launch any new projects (expected). Management remains confident of launching three new projects in 4QFY15. For better operations, the sales of legacy residential projects need to increase. Although its business is improving, we believe GPL still trades at a premium to its fair value. Maintain REDUCE
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
��
3QFY15 results review – improving cash flows GPL’s revenue of `5.2 bn was higher than our estimates primarily because of the sales at its BKC project in Mumbai. Godrej Summit, Gurgaon, started recognizing revenue in 3QFY15. EBITDA margins were lower than our estimates, again because of BKC, which is a lowmargin project and contributed to a higher proportion of revenue and cost. Godrej Summit phase-1 is also a low margin project. GPL booked around `750 mn of interest through project expenses, higher than any other quarter. Project cash flows improved further in 3QFY15, which is significant. Although debt increased by `1.3 bn, it is lower than the amount GPL spent for stake acquisitions, mainly because of strong sales over the past four quarters from high-margin projects. 3QFY15 operations review – no new project launches results in lower sales, no surprise GPL sold 0.7mn sq. ft of residential and commercial projects in 3QFY15. Sales volumes dropped 50% as it had no new launches. MMR contributed to around 36% of its sales followed by Bangalore and Pune. Unlike its other projects in the south, both its DM-fee projects in Bangalore are selling consistently. GPL confident of three new launches in 4QFY15; we await management commentary While GPL has delayed the launch of its residential development at Trees, Vikhroli (Mumbai), it remains confident of launching three new projects in 4QFY15, of which two are in Mumbai. If launched, we expect a strong response for its Chembur (Mumbai) launch; the other project is a DM whose launch has been delayed due to approvals. GPL’s JV in Keshavnagar, Pune, will be its largest launch in the city so far. Given its strong parentage, debt is still not a concern; however, it is growing. We await the management’s commentary on its stance on absolute debt (most of it is towards commercial projects), new-acquisition spends (high cash on books) and the sales momentum at its legacy residential projects.
LINK
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily28012015po.pdf
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