We upgrade Godrej Properties to hold (from reduce) and revise our target price to Rs 579 (Rs 501 earlier) largely led by additions to its project portfolio. Godrej Properties added three new projects during Q4FY13 for a saleable area of 2.3 million sq ft (msf) and a total of eight new projects in FY13. With a large project pipeline in place and existing investments in commercial properties,the company continues to be in an investment mode and has planned to raise up to Rs 700 crore through a rights issue.
Godrej Properties ebitda & PAT at Rs 98.4 crore and Rs 53.2 crore were above our estimates by 39% and 60%,respectively,led by Godrej Prakriti phase-IV hitting the revenue recognition threshold faster than expected.
In terms of operational performance,the company sold 0.5 msf (Godrejs economic interest ex-Development Management projects) for Rs 530 crore during the quarter against 0.44 msf for Rs 290 crore in Q3FY13. For the year,GPL sold 2.9 msf for a value of Rs 200 crore against ~2 msf for ~Rs 1,150 crore for FY12. Net debt as at Q4FY13 stood at Rs 1,500 crore,stable sequentially and down by ~Rs 100 crore from H1FY13,led by an increase in other liabilities. While net debt reduced,the companys debt-equity ratio still remains high at 1.05x.