Godrej Properties – Sales Volume Witness Traction But Realisation Declines

Indian real estate companies have been witnessing a sort of lull since the past few periods and most of the companies had underperformed the broader market during this time phase. However, some amount of traction is being witnessed in few of the realty companies in terms of run up on the bourses. A few stocks have witnessed an up-move of more than 10-30%.

But the moot question which stands here is that, is the improvement for real or are the stocks just moving ahead in anticipation of stable government and possible recovery. If we take a look at the quarterly performance of Godrej Properties for March 2014, it seems that the recovery is still underway.

Just to put the numbers in perspective, though the topline of the company increased to Rs 435.60 crore from the levels of Rs 313.90 crore in March 2013, the PBT and PAT figures have declined. For March 2014, the PBT stood at Rs 78.70 crore against Rs 98.30 crore in March 2013. Similarly the PAT for March 2014 quarter declined to Rs 48.30 crore from the levels of Rs 53.20 crore for similar period last year. This clearly indicates that the realisations have actually declined.

On the sales volume in March quarter it sold 13.42 lakh sq ft of area for a sum of Rs 1066 crore as against 6.37 lakh sq ft in March 2013 for Rs 601 crore. In December 2013 the company had sold 5.13 lakh sq ft of area for Rs 428 crore. This clearly indicates that the realisations have declined significantly to Rs 7937 per sq ft in March 2014 from the levels of average realisation of Rs 9439 per sq ft in March 2013 and Rs 8332 per sq ft in December 2013.

As for the full year the topline stood at Rs 1254.20 crore in FY14 as against Rs 1047.60 crore in FY13. The PBT increased to Rs 347.40 crore as against Rs 288.90 crore respectively. There was a healthy rise in the PAT to Rs 159.40 crore in FY14 as against Rs 138.40 crore in FY13.

While the sales have actually increased, we have to analyse the debt levels of the company. There was some amount of relief on the long term debt front, as in FY14 the long term debt reduced to Rs 286 crore from the levels of Rs 375.66 crore in FY13. However, the short term debt has actually increased to Rs 2412.94 crore in FY14 as against Rs 1287.62 crore in FY13. The net debt increased to Rs 1700 crore as against Rs 1497 crore in March 2013. This we feel, is a matter of worry as short term debt is a major worry for all realty companies.

As for the land holding by the company, Godrej Properties is currently developing residential, commercial and township projects spread across 9.3 million square meters (100 million square feet) in 12 cities. Commenting on the financial performance of Q4 & FY2014, Pirojsha Godrej (Managing Director & CEO Godrej Properties) said, “Our performance for the year underlined the effectiveness of our resilient and differentiated business model and strong execution. We sustained growth in a challenging environment with revenues, EBITDA and net profit growing by 20%, 21% and 15% respectively in FY2014. I am delighted to share we have delivered GPL's highest ever quarterly sales with total booking value in Q4FY14 increasing by 149% QoQ to INR 1066 crore. We expect FY2015 to be an exciting year for GPL with major launches planned in all the top real estate markets of India.”