The stock of Godrej Properties gained about 24 per cent over the last month on account of strong sales in the June quarter and brokerage upgrades. The realty index, however, remained flat during this period.
Besides, the company continues to build a project pipeline that gives visibility in revenues. The latest trigger for the company is its two projects in Bengaluru.They believe the company is among the best placed in the sector on execution, product portfolio and financial strength. Net debt to equity at 1.7 times is expected to come down from the sale of Godrej BKC inventory.
The two recent projects will help to improve the pipeline and sales, which had hit a record level in the June quarter. Despite the weak sentiment on account of the goods and services tax and the Real Estate Regulation Act, the company reported its highest residential project sales of Rs 1,470 crore, in which the share of Godrej Properties was Rs 960 crore. Four launches in Mumbai, Pune and Greater Noida contributed to about 80 per cent of the company’s June-quarter sales. At the current price, the stock is trading at 27 times its FY19 estimates and given target prices around the Rs 700-mark, there is a returns potential of about 13 per cent. Investors should await steady growth in launches and higher sales to take an exposure to the stock.