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  • Stock recommendation: Godrej Properties — Sell — Target price Rs 400

    Publish date: August 7, 2018

    Results update: Moderating momentum

    Godrej Properties lost a chunk of its consolidated net profit due to higher finance costs.

    The sales figure was below average despite the company launching four new projects in the first quarter of the financial year.

    Key Highlights

    • The company’s consolidated net profit slumped by 67% (QoQ). Some of the reasons for the slump are a change in accounting standards (IND-AS) and lower bookings.
    • Total sales were Rs 8.2 billion. About 64% of that money came from the new project launches in Mumbai, Pune and Delhi NCR.
    • The company saw a 35% (YoY) slip in sold area and 44% slump in booking value this quarter.
    • The company’s total income grew by 18.9% from a year ago but its EBITDA shrunk by 466% (YoY).
    • Godrej Properties are looking to launch nine more projects by the end of the financial year. Of them, three are under the joint venture model.

    Valuation & outlook

    We expect the company’s sales and cash flow to improve going forward. However, future positives are mitigated due to rich valuation of the company’s stock.

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