GODREJ PROPERTIES LTD - Myirisbreport.myiris.com/firstcall/GODPROIN_20140526.pdf · During Fy14...
Transcript of GODREJ PROPERTIES LTD - Myirisbreport.myiris.com/firstcall/GODPROIN_20140526.pdf · During Fy14...
CMP 236.25
Target Price 274.00
ISIN: INE484J01027
MAY 26th
2014
GODREJ PROPERTIES LTD
Result Update (PARENT BASIS): Q4 FY14
BUYBUYBUYBUY
Index Details
Stock Data
Sector Realty
BSE Code 533150
Face Value 5.00
52wk. High / Low (Rs.) 270.34/153.90
Volume (2wk. Avg. Q.) 98000
Market Cap (Rs. in mn.) 47069.03
Annual Estimated Results (A*: Actual / E*: Estimated)
YEARS FY14A FY15E FY16E
Net Sales 6640.05 8499.26 10199.12
EBITDA 2197.02 2696.92 3100.77
Net Profit 976.52 1192.97 1373.40
EPS 4.90 5.99 6.89
P/E 48.20 39.46 34.27
Shareholding Pattern (%)
1 Year Comparative Graph
GODREJ PROPERTIES LTD BSE SENSEX
SYNOPSIS
� Godrej Properties Limited (GPL) Established in
1990, a leading national real estate developer.
� Godrej Properties is currently developing
residential, commercial and township projects
spread across 9.3 million square meters in 12 cities
across India.
� The company’s Standalone net sales at Rs. 3575.09
million from Rs. 1501.91 million over the
corresponding quarter last year.
� During Q4 FY14, Net profit jumps to Rs. 409.25
million against Rs. 366.24 million in the
corresponding quarter of the previous year.
� During Fy14 Godrej Properties Ltd added 8 new
projects with Rs.13.42 mn sq.ft. of saleable area.
� Godrej Properties Limited received 9 awards in Q4
FY2014 and has received 28 awards in FY2014.
� Godrej Properties Ltd has added seventeenth
project in Mumbai with Rs. 0.8 million sq. ft.
Saleable area.
� The Company has recommended dividend of Rs. 2
per equity share of Rs. 5 each for the year ended
31st March 2014.
� During Q4 FY14, total booking value of Rs. 10660
million compared to Rs. 6010 million in Q4 FY2013
and total booking volume of 1.34 mn sq.ft.
� Net Sales and PAT of the company are expected to
grow at a CAGR of 34% and 4% over 2013 to 2016E
respectively.
PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND
Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)
Godrej Properties Ltd 236.25 47069.03 4.90 48.20 2.63 40.00
Anant Raj 66.75 19697.7 0.88 75.85 0.51 20.00
Sobha Developers 439.75 43123.6 21.06 20.88 2.04 70.00
Sunteck Realty 338.80 21333.0 1.98 171.11 5.74 9.00
QUARTERLY HIGHLIGHTS (PARENT BASIS)
Results updates- Q4 FY14,
Godrej Properties Ltd is currently developing
residential, commercial and township projects
spread across approximately 9.3 million square
meters in 12 cities across India has reported its
financial results for the quarter ended 31st Mar,
2014.
Months Mar-14 Mar-13 % Change
Net Sales 3575.09 1501.91 138.04
PAT 409.25 366.24 11.74
EPS 2.05 4.69 (56.23)
EBITDA 717.68 392.27 82.96
The company has achieved a turnover of Rs. 3575.09 million for the 4th quarter of the current year 2013-14 as
against Rs. 1501.91 millions in the corresponding quarter of the previous year. The company has reported net
profit of Rs. 409.25 million against Rs. 366.24 million reported respectively in the corresponding quarter of the
previous year. The company has reported an EPS of Rs. 2.05 for the 4th quarter as against an EPS of Rs. 4.69 in the
corresponding quarter of the previous year. Profit before interest, depreciation and tax is Rs. 717.68 millions as
against Rs. 392.27 millions in the corresponding period of the previous year.
Break up of Expenditure
Particulars
Rs. Millions
Q4 FY14 Q4 FY13
Cost of Sales 2965.28 889.88
Employee Benefit Expenses 77.94 46.59
Depreciation 14.24 9.85
Other Expenses 64.08 135.56
Latest Updates
� The Company has recommended dividend of Rs. 2 per equity share of Rs. 5 each for the year ended 31st March
2014.
� During the year the Company has sub-divided equity shares of face value Rs.10 each to equity shares of face
value Rs.5 each.
� During Fy14 Godrej Properties Ltd added 8 new projects with Rs.13.42 mn sq.ft. of saleable area.
� Godrej Properties Limited received 9 awards in Q4 FY2014 and has received 28 awards in FY2014.
� Pursuant to the scheme of Amalgamation, the amount of Rs.27600.50 lac arising out of the difference
between transferor Companies and Transferee Company has been adjusted from General Reserve Account
and surplus in statement of profit & Loss. Amalgamation expenses amounting Rs.25 Lac charged off to
statement of profit & Loss.
� During the quarter, the Employee Stock Grant Scheme, 2011, 240 stock grants have vested and have been
exercised.
� GPL, the real estate development arm of the Godrej Group, has added a new project in Sector 79, Gurgaon to
its development portfolio. The land parcel measures 17.4 acres and the project will be developed as a
premium residential housing project. The expected saleable area in the project is .15 million square meters.
Business Development Highlights:
� Added 4 projects in 4 separate cities with Rs.9.6 mn sq.ft. of saleable area in Q4 FY14.
Vikhroli, Mumbai
� Added GPL’s seventeenth project in Mumbai with Rs. 0.8 million sq. ft. Saleable area.
� DM Project -GPL’s economic interest is 10% of revenues.
Keshav Nagar, Pune
� Added GPL's fourth residential project in Pune with Rs. 2.8 mn sq.ft. Saleable area.
� GPL’s economic interest is 35% of profits.
� Close proximity to IT parks of Kharadi and Hadapsar.
Padur, Old Mahabalipuram Road, Chennai
� Added GPL's second project in Chennai with Rs.1 mn sq.ft. Saleable area.
� GPL's economic interest is 44.5% of profits
� Project will be developed as a modern group housing residential development.
Devanhalli, Bangalore
� Added GPL's seventh project in Bangalore with Rs. 5.00 mn sq.ft. Saleable area.
� GPL’s economic interest is 50% of profits.
� Project will be developed as an integrated township with a mix of residential units, school, convenience
retail and other amenities
New Project launched in FY 14.
GPL has Lunched Godrej Central, Chembur in Mumbai, Godrej Garden City, Ahmedabad, Godrej Platinum Alipore,
Godrej Horizon Pune, Godrej E City Bangalore and Godrej Prakriti in Kolkata.
Other projects which are on- track in FY 15
� Godrej City, Panvel, Mumbai.
� Sahakar Nagar 2 Redevelopment, Chembur in Mumbai.
� The Trees, Vikhroli Residential Phase 1 in Mumbai.
� Keshav Nagar, Pune
� Godrej Sky, Byculla, Mumbai
� Godrej Anandam Nagpur.
� Godrej Palm Grove Chennai.
� Godrej Garden City, Ahmedabad.
� Godrej Summit, Gurgaon.
� Godrej Platinum, Mumbai.
� Godrej Gold County, Bangalore.
� Godrej Prana, Pune.
� Godrej Central, Mumbai
Sales Highlights
� Highest ever sales in a single quarter Rs.10000 mn in quarterly sales for the first time in GPL’s history
� During Q4 FY14, total booking value of Rs. 10660 million compared to Rs. 6010 million in Q4 FY2013
and total booking volume of 1.34 mn sq.ft.
� Residential projects recorded booking value of Rs. 8350 million and booking volume of 0.90 million sq.ft.
� Commercial projects recorded booking value of Rs. 2310 million and booking volume of 0.44 million sq.ft.
COMPANY PROFILE
Godrej Properties Limited Established in 1990 and is headquartered in Mumbai, India, is the first real estate
company to have ISO certification. Godrej Group ranked as 2nd most trusted Indian brand in the 2013 Brand
Trust Report. The company was formerly known as Godrej Properties and Investments Limited and changed its
name to Godrej Properties Limited in November 2004. Godrej Properties brings the Godrej Group philosophy of
innovation and excellence to the real estate industry. Godrej Properties is currently developing residential,
commercial and township projects spread across 9.3 million square meters in 12 cities across India. To create
landmark structures, Godrej Properties collaborates with outstanding associates and reputed names. The
company aims to deliver superior value to all stakeholders through extraordinary and imaginative spaces
created out of deep customer focus and insight. Godrej Properties Limited is a subsidiary of Godrej Industries
Limited.
Over the last Few years, Godrej Properties has received over 60 awards and recognitions, including “Popular
Choice - Developer of the Year” award by ET NOW in 2013 and “Best Business Practice in Real Estate” for the
year 2012 by Accommodation Times.
FINANCIAL HIGHLIGHT (PARENT BASIS) (A*- Actual, E* -Estimations & Rs. In Millions)
Balance Sheet as at March31, 2013 -2016E at March31, 2012 - at March31-2015E
GODREJ PROPERTIES LTD FY13A FY14A FY15E FY16E
I EQUITY & LIABILITIES
A) Shareholder's Funds
a) Share Capital 780.46 991.23 991.23 991.23
b) Reserves and Surplus 12862.48 16910.31 18103.28 19476.68
Sub-Total Net worth 13642.94 17901.54 19094.51 20467.91
B) Non Current Liabilities
a) Long term borrowing 3460.92 2037.03 1588.89 1366.44
b) Other Long term liabilities 2.77 10.85 13.45 16.14
c) Long term Provisions 27.82 28.58 30.29 31.81
Sub-Total Non Current Liabilities 3491.51 2076.46 1632.63 1414.39
C) Current Liabilities
a) Short term borrowings 4256.15 13166.91 16326.96 18776.01
b) Trade payables 1088.10 1105.21 1149.41 1183.90
c) Other Current liabilities 4773.53 7019.34 8282.83 9359.59
d) Short term Provisions 420.13 477.42 525.17 567.18
Sub-Total Current Liabilities 10537.91 21768.88 26284.37 29886.68
TOTAL EQUITY & LIABILITIES (A+B+C) 27672.36 41746.89 47011.51 51768.98
II ASSETS
D) Non-Current Assets
a) Fixed Assets 580.87 1111.77 1367.48 1613.62
b) Non-current investments 1700.32 3159.48 3917.75 4622.94
c) Deferred Tax Asset 40.58 18.62 20.48 22.12
d) Long Term loans and advances 1518.54 1250.82 1100.72 1023.67
e) Other non-current assets 108.19 28.83 30.55 32.69
Sub- Total Non-Current Assets 3948.50 5569.51 6436.99 7315.05
E) Current Assets
a) Inventories 6506.11 9283.31 10954.31 12365.75
b) Trade receivables 631.58 1162.34 1348.32 1537.08
c) Cash and Bank Balances 474.54 6525.19 7503.97 8329.41
d) Short-terms loans & advances 14638.39 17039.25 18402.39 19690.56
e) Other current assets 1473.23 2167.28 2365.54 2531.13
Sub-Total Current Assets 23723.86 36177.37 40574.53 44453.92
Total Assets (D+E) 27672.36 41746.89 47011.51 51768.98
Annual Profit & Loss Statement for the period of 2013 to 2016E
Value(Rs.in.mn) FY13A FY14A FY15E FY16E
Description 12m 12m 12m 12m
Net Sales 4267.10 6640.05 8499.26 10199.12
Other Income 627.85 1025.52 1107.56 1162.94
Total Income 4894.95 7665.57 9606.83 11362.06
Expenditure -2865.33 -5468.55 -6909.90 -8261.28
Operating Profit 2029.62 2197.02 2696.92 3100.77
Interest -598.19 -1185.40 -1375.06 -1567.57
Gross profit 1431.43 1011.62 1321.86 1533.20
Depreciation -35.38 -49.48 -58.39 -67.14
Profit Before Tax 1396.05 962.14 1263.47 1466.05
Tax -169.37 14.38 -70.50 -92.65
Net Profit 1226.68 976.52 1192.97 1373.40
Equity capital 780.46 996.17 996.17 996.17
Reserves 12862.48 16910.31 18103.28 19476.68
Face value 10.00 5.00 5.00 5.00
EPS 15.72 4.90 5.99 6.89
Quarterly Profit & Loss Statement for the period of 30 SEP, 2013 to 30 JUNE, 2014E
Value(Rs.in.mn) 30-Sep-13 31-Dec-13 31-Mar-14 30-Jun-14E
Description 3m 3m 3m 3m
Net sales 1225.99 747.60 3575.09 2681.32
Other income 254.48 341.41 249.89 262.38
Total Income 1480.47 1089.01 3824.98 2943.70
Expenditure -934.85 -541.03 -3107.30 -2252.31
Operating profit 545.62 547.98 717.68 691.40
Interest -285.95 -349.99 -315.60 -353.47
Gross profit 259.67 197.99 402.08 337.92
Depreciation -12.14 -13.04 -14.24 -14.81
Profit Before Tax 247.53 184.95 387.84 323.11
Tax -4.69 -1.38 21.41 -17.77
Net Profit 242.84 183.57 409.25 305.34
Equity capital 996.16 996.17 996.17 996.17
Face value 10.00 10.00 5.00 5.00
EPS 2.44 1.84 2.05 1.53
Ratio Analysis
Particulars FY13A FY14A FY15E FY16E
EPS (Rs.) 15.72 4.90 5.99 6.89
EBITDA Margin (%) 47.56 33.09 31.73 30.40
PBT Margin (%) 32.72 14.49 14.87 14.37
PAT Margin (%) 28.75 14.71 14.04 13.47
P/E Ratio (x) 15.03 48.20 39.46 34.27
ROE (%) 8.99 5.45 6.25 6.71
ROCE (%) 9.67 6.78 7.44 7.80
Debt Equity Ratio 0.57 0.85 0.94 0.98
EV/EBITDA (x) 12.65 25.37 21.31 18.99
Book Value (Rs.) 174.81 89.88 95.86 102.76
P/BV 1.35 2.63 2.46 2.30
Charts
OUTLOOK AND CONCLUSION
� At the current market price of Rs.236.25, the stock P/E ratio is at 39.46 x FY15E and 34.27 x FY16E
respectively.
� Earning per share (EPS) of the company for the earnings for FY15E and FY16E is seen at Rs.5.99 and Rs.6.89
respectively.
� Net Sales and PAT of the company are expected to grow at a CAGR of 34% and 4% over 2013 to 2016E
respectively.
� On the basis of EV/EBITDA, the stock trades at 21.31 x for FY15E and 18.99 x for FY16E
� Price to Book Value of the stock is expected to be at 2.46 x and 2.30 x respectively for FY15E and FY16E.
� We recommend ‘BUY’ in this particular scrip with a target price of Rs.274.00 for Medium to Long term
investment.
INDUSTRY OVERVIEW
Real estate in India continues to be a favoured destination globally for investors, developers and non-resident
Indians (NRIs), driven largely by investor-friendly government policies and increasing globalisation. The second
largest employment generation sector after agriculture, real estate contributes about 6.3 per cent to India's gross
domestic product (GDP). The foreign direct investment (FDI) in the sector is expected to touch US$ 25 billion in
the next 10 years from its current US$ 4 billion.
The sector's progress is driven by factors such as rapid urbanisation, a growing trend towards nuclear families,
positive demographics, rural–urban migration, ever-developing infrastructure, higher income levels and housing
demand. The real estate sector, with its growing investment opportunities, is expected to post annual revenues of
US$ 180 billion by 2020.
Market Dynamics
The real estate sector in India is witnessing rapid growth in the residential, commercial and industrial segments.
Real estate development, once restricted to bigger cities, have shown marked progress in smaller cities and
towns owing to availability of banks loans, higher earnings and improved standard of living.
The real estate sector of India is projected to post annual revenues of US$ 180 billion by 2020 against US$ 66.8
billion in 2010-11, a compound annual growth rate (CAGR) of 11.6 per cent. The demand is expected to grow at a
CAGR of 19 per cent in the period 2010-2014, with Tier I metropolitan cities expected to account for about 40
per cent of this growth. As of now, Mumbai, Delhi-National Capital Region (NCR) and Bengaluru cater for 46 per
cent of total office space demand in India. This demand is expected to be rise sharply in Tier II cities such as
Kolkata and Chennai in the period 2010-14.
Today, Delhi-NCR accounts for about 30 per cent of the total mall supply in India. About 53 per cent of demand
for total mall space is projected to come from the country's top seven cities, namely Delhi-NCR, Bengaluru,
Mumbai, Kolkata, Pune, Hyderabad, and Chennai, in the period 2010-2014.
Investment Opportunities
The Indian retail realty sector is projected to grow at around 15 per cent year-on-year over the next 3-5 years as
against a 12-13 per cent nominal growth of India's GDP estimated by the International Monetary Fund (IMF). If
the sector does indeed manage the aforementioned growth, it will touch Rs 34 trillion (US$ 544.73 billion) by
2016.
India's office space stock is estimated to rise by 40 per cent to 642.2 million sq ft by 2017, according to a report
by real estate consultancy Knight Frank India. The current Indian market offers some of the most competitive
rates in the Asia-Pacific region, according to a report by property services firm DTZ. The report also states that
Indian cities will have some of the fastest rental growths in the region over the period 2013-17, but will remain
among the most competitive.
The share of luxury retail space in India will be 1.4 per cent by 2015, according to a report by real estate services
firm Cushman & Wakefield. NCR and Mumbai, areas that have embraced the mall culture, are the two most
favoured destinations for luxury retailers.
The construction development sector, including townships, housing and built-up infrastructure garnered total
FDI worth US$ 22,671.95 million in the period April 2000-August 2013. Construction (infrastructure) activities
during the period received FDI worth US$ 2,280.95 million.
The following are some of the major investments in the Indian real estate sector:
• Godrej Properties Ltd plans to invest Rs 9,000 crore (US$ 1.44 billion) in 15 new real estate projects in
India over the next 10 years.
• Unitech Ltd has signed a Rs 800 crore (US$ 128.17 million) deal to lease an 800,000 sq ft space at one of
its IT Special Economic Zones (SEZ) in Gurgaon, to multinational human resource firm, Aon Hewitt.
• NRI billionaire Mr Ravi Pillai plans to purchase stake worth about US$ 100 in a special purpose vehicle
floated by Pune-based realtor, Panchshil Realty. The investment will go into the construction of Trump
Towers and World Trade Centre in Pune, Maharashtra.
• Infrastructure Leasing & Financial Services (IL&FS) Ltd has claimed a project worth Rs 244.46 crore (US$
39.17 million) from realty firm Emaar MGF for construction work at the latter's residential project at
Gurgaon, Haryana.
• French luxury hotel chain Sofitel, which is managed by Accor Group, is targeting 10 properties in India,
mainly in major luxury destinations, in the next few years.
Government Initiatives
According to the existing FDI policy, 100 per cent FDI in the construction development sector is permitted
through the automatic route. DIPP is looking at relaxing FDI norms further to encourage investment. It has also
proposed a reduction in the minimum capitalisation for wholly-owned subsidiaries from US$ 10 million to US$ 5
million, and from US$ 5 million to US$ 2.5 million for joint ventures with Indian partners.
One of the major initiatives of the Ministry of Housing and Urban Poverty Alleviation (MHUPA) is to provide
affordable housing for poor people living in urban areas. The Jawaharlal Nehru National Urban Renewal Mission
(JNNURM) is one its flagship schemes, a reform driven investment programme which started with the objective
of creating economically productive, efficient, responsive and inclusive cities.
The Real Estate (Regulation and Development) Bill, 2013, as approved by the Union Cabinet is a pioneering
initiative aimed at delivering a uniform regulatory environment to protect the consumer, help in quick verdicts of
disputes and ensure systematic growth of the sector.
Road Ahead
Demand for space from sectors such as education and healthcare has opened up opportunities in the real estate
sector. Also, growth in the number of tourists has led to demand for service apartments. This demand in the
tourism sector is expected to generate 50,000 new hotel rooms over the next four to five years, across India's
major cities.
Disclaimer:
This document prepared by our research analysts does not constitute an offer or solicitation for the purchase or sale
of any financial instrument or as an official confirmation of any transaction. The information contained herein is
from publicly available data or other sources believed to be reliable but do not represent that it is accurate or
complete and it should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it’s affiliates shall
not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the
information contained in this report. This document is provide for assistance only and is not intended to be and must
not alone be taken as the basis for an investment decision.
Firstcall India Equity Research: Email – [email protected]
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