Ashika Monthly Insight Flip July 2016

FDI - WINDOW OF OPPORTUNITY
and right selection of projects across different cities. The
company has benefitted largely due to its positioning of
projects mostly across tier 1 cities -Mumbai, Bengaluru,
NCR region, Kolkata, Hyderabad and Chennai comprising
~80% of the total projects. This has helped the company
to withstand the slowdown in the real estate markets.
GPL recorded the highest booking value in FY16: In FY16,
Godrej Properties recorded a robust top line growth of
42% YoY at Rs 2,728 cr. However, Net profit was higher
by only 21% YoY at Rs 231cr mainly driven by cost
escalation on some old projects and a slightly adverse
Cities
Mumbai
New Project Launches in FY16
Projects
Godrej Prime, Godrej Vihaa, Godrej Sky,The
Trees- Residential Phase 1
Gurgaon Godrej Icon, Godrej 101
Chennai
Bangalore
Mumbai
Godrej Azure
Godrej Avenues
New Phase Launches in FY16
The Trees Residential Phase 2, Godrej
Platinum
Ahmedabad Godrej Garden City
Nagpur
Chennai
Pune
Godrej Anandam
Godrej Palm Grove
Godrej Prana, Godrej Infinity
In Mumbai, ‘The Trees’ project in Vikhroli in residential
space and Godrej BKC project in commercial space have
been the most successful ones by GPL. The company has
sold 150 out of 230 flats of ‘The Trees’ project under
phase 2 project and phase 2 project achieved 9% higher
pricing than Phase 1 project. Under the ongoing Vikhroli’s
‘The Trees’ project, the company plans to extend the
project and launch 4th tower of platinum project, phase 3
of residential, 2nd office tower and also a hospitality &
retail component. This project has been quite successful
for the company as phase 2 achieved higher pricing this
year. Godrej BKC is also ahead of schedule and is
expected to fetch more Rs 1500 cr in the coming
quarters, according to the management. The company is
now extending its footprints into Noida and Gurgaon too.
GPL’s capital light model gives it a competitive edge:
According to the management, GPL’s business model has
been capital light. It invests up to a maximum of 20% of
sales mix. The company recorded 88% YoY growth in its
bookings and booking value stood at Rs 5,038 cr, the
highest quoted value by any listed real estate player in
FY16. The company delivered 6 million sq. ft. in FY16, a
growth of 71% over the previous year. This is a milestone
achievement by the company. GPL’s cash collection also
went up by 60% to Rs3200 cr. GPL’s launch of projects at
prime locations, effective marketing strategy and timely
delivery of its projects has been the company’s strength.
Below are the companies’ detailed projects and phase
launches over the next two years:
Cities
Bangalore
New Project Launches in FY17
Projects
Godrej Eternity
NCR Sector 150 – Noida; Godrej Platinum –
Okhla
Mumbai
Pune
Chennai
Mumbai
Ghodbunder Road – Thane, Godrej Park
New Phase Launches in FY17
Godrej Infinity, Godrej Prana
Godrej Azure, Godrej Palm Grove
Godrej Vihaa, The Trees, Godrej Platinum,
Godrej City
Ahmedabad Godrej Garden City
Nagpur
Godrej Anandam
investment in land value and has a profit/revenue sharing
model. The company also takes a fee income and
promotes if the projects are doing well. This not only
hedges the company on the downside if projects gets
stalled or have less profit but also gives them a benefit in
the form of promotes if the projects are doing well.
GPL’s declining borrowing costs and termination of
dividends payments for expansion plans augurs well: GPL’s
average borrowing cost has come down by 112bps YoY to
10.06%. The company has also held back dividends this
year as it aims to reinvest in its high return business in
order to maximize the shareholder value in the long run.
The recent change in government’s rule on dividend
taxation also led to this call for holding back dividends.
Recently passed Realty Bill will benefit the organized
players like GPL: The recently passed Realty Bill will boost
the investors’ confidence on account of higher
transparency, greater cash flow predictability, faster project
9