Release Date: October 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Godrej Properties Ltd (BOM:533150, Financial) achieved the highest Q2 and H1 collections, operating cash flows, and deliveries in its history.
- The company has already achieved 51% of its annual bookings guidance, with a 90% growth in booking value for the first half of FY25.
- Significant growth in key markets: NCR bookings grew 70%, Bengaluru 212%, and MMR 114% in the first half of FY25.
- Operating cash flow for Q2 grew by 126% year-on-year, and for the first half, it grew by 204%.
- Godrej Properties added 10 projects in FY25 with an estimated saleable area of nearly 14 million square feet and a booking value potential of about INR17,500 crore.
Negative Points
- Concerns about potential overheating in the real estate market, particularly in land prices and final sale conditions.
- The company faces challenges in maintaining a balance between rapid growth and sustainable land acquisition strategies.
- There is a significant amount of cash, around INR3,000 crore, tied up under RERA regulations, affecting liquidity.
- Potential delays in project approvals, particularly in markets like Bangalore, could impact future launches.
- The promoter stake may fall below 50% post-fundraise, which could affect shareholder confidence.
Q & A Highlights
Q: It seems likely you will exceed your booking value guidance. What should we expect for FY26?
A: Pirojsha Godrej, Executive Chairman, stated that they are on track to surpass 50% of their full-year guidance, with the second half typically being stronger. They aim to continue strong growth this year and into the next, though specific numbers will be shared later.
Q: What are the current pricing trends in your market, and how do they compare to your underwriting?
A: Gaurav Pandey, CEO, noted strong price growth in NCR and Bangalore, with Gurgaon showing robust growth. They have seen a 10-15% price increase over underwriting levels across most of their portfolio.
Q: With collections up but construction outflow not as much, should we expect a significant increase in the second half?
A: Gaurav Pandey explained that construction costs peak in mid to advanced stages. They expect acceleration in Q3 and beyond, with significant construction milestones expected in the latter part of the year.
Q: How do you plan to manage land acquisitions given rising land prices?
A: Pirojsha Godrej emphasized a disciplined approach, aiming for an IRR of 20-25% at current prices without relying on future price increases. They focus on maintaining EBITDA margins of 25-30%.
Q: Are you seeing any market overheating, and what are your concerns?
A: Gaurav Pandey reported strong demand and performance exceeding underwriting. While some areas may see price saturation, overall market conditions remain robust with strong walk-ins and sales.
Q: What is your strategy for land bank replenishment and growth?
A: Pirojsha Godrej mentioned that they aim for a 20% growth rate through the cycle, with opportunities for faster growth in the near term. They focus on maintaining a balanced land bank to support this growth.
Q: How do you plan to utilize the funds from the recent capital raise?
A: Pirojsha Godrej stated that the funds will be used to boost growth across various markets, with no specific allocation to any city. They aim to deploy capital where the best returns are achievable.
Q: What is the buyer profile in Gurgaon and Noida, and how many take mortgages?
A: Gaurav Pandey noted that 50-70% of buyers take mortgages. Noida is more end-user driven, while Gurgaon has a mix of end-users, long-term investors, and speculators. They focus on attracting end-users through strategic sales practices.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
