Reviews

In this edition, we have reviewed Godrej Properties Limited and IDBI Bank Limited. We suggest our readerinvestors to HOLD Godrej Properties Limited and IDBI Bank Limited 

We had recommended Godrej Properties in Volume 39, Issue No. 13 dated May 20, 2024 — June 2, 2024, under the ‘Analysis’ segment. The recommended price for the stock was ₹2,815.10. We had recommended the stock on the basis of the company’s strong cash flow, collections and robust demand. Godrej Properties is the real estate arm of the Godrej Group, a trusted and well-known Indian business conglomerate founded in 1897. GPL focuses on innovation, sustainability and quality in its projects. 

It has become one of India’s top property developers and follows an asset-light business model to enhance efficiency and growth. In Q2FY25, the company reported consolidated revenue of ₹1,093 crore, reflecting a 218 per cent YoY growth from ₹343 crore and a 45 per cent quarter-on-quarter (QoQ) increase. The net profit grew 357 per cent YoY to ₹334 crore. For FY24, the company’s consolidated results showed a revenue of ₹3,036 crore, a 34.8 per cent increase from ₹2,252 crore in FY23. Its net profit surged by 20 per cent to ₹747 crore, compared to ₹621 crore in FY23. 

At TTM, the shares of the company are trading at a PE multiple of 65 times, which exceeds the industry median of 35.9 times but is slightly below its five-year historical median of 89.1 times, suggesting a decent valuation considering its growth potential. If we look at its PBV, it is currently at 7.07 times, which is higher than the industry PBV of 3.21 times. The company has a three-year average compounded profit and sales growth of 70 per cent and 58 per cent, respectively. Godrej Properties achieved record collections, cash flows and deliveries in Q2 and H1FY25, adding 10 projects (14 million sq. feet with ₹17,500 crore potential bookings). 

The key launches include Godrej Jardinia in NCR (₹1,500 crore bookings) and Godrej Phase in MMR (₹600 crore bookings). Strong growth in NCR (70 per cent), Bangalore (212 per cent) and MMR (114 per cent) reflects robust demand and favourable pricing trends. The management expects to exceed FY25 booking guidance, with significant launches planned for H2FY25 in Worli and Gurgaon, targeting 20-25 per cent IRR and 25-30 per cent EBITDA margins on new projects. Hence, we recommend HOLD. 

We had recommended IDBI Bank in Volume 39, Issue No. 13 dated May 20, 2024 — June 2, 2024, under the ‘Low Price’ segment. The recommended price for the stock was ₹84.20. We had recommended the stock on the basis of the company’s strong financial health, healthy proportion of CASA and strong future growth. IDBI Bank is a full-service universal bank that serves customers from all segments, inheriting its legacy from its predecessor, the Industrial Development Bank of India. 

IDBI Bank has expanded its services beyond project financing to contribute to the balanced geographical spread of industries, development of backward areas, and the evolution of a vibrant capital market. As a universal bank, IDBI Bank offers a wide range of banking products and services, including deposits, loans, payment services and investment solutions. The bank’s business philosophy is characterised by providing relevant financial solutions, ensuring customer convenience through easy access to branches and ATMs, and excellence in customer service. 

IDBI Bank provides various types of services, including retail banking, corporate banking, agriculture-related business and microfinance, and SME sector products and services. In Q2FY25, on a consolidated basis, the interest earned by the bank increased by 23.3 per cent YoY to ₹7,445.01 crore compared to ₹6,038.35 crore from the previous year’s same quarter. 

On a sequential basis, its revenue increased by 11.62 per cent. The operating profit stood at ₹3,024.14 crore compared to ₹2,175.31 crore, a YoY increase of 39.02 per cent, while sequentially increasing by 43.85 per cent from ₹2,102.32 crore. The net profit increased by 32.69 per cent to ₹1,848.73 crore YoY as compared to ₹1,393.24 crore from the previous year’s same quarter, while sequentially increasing by 6.3 per cent. At TTM, the shares of the bank are trading at a PBV of 1.62 times, which is higher than the industry PBV of 1.25 times. 

The bank has a three-year average compounded profit and sales growth of 56 per cent and 10 per cent, respectively. The bank demonstrates strong financial health with robust capital buffers and improving internal accruals. Its deposit base is reasonable, characterised by a healthy proportion of low-cost current and savings accounts (CASA). The bank maintains comfortable asset quality metrics with high provision coverage. Furthermore, its profitability profile is expected to remain strong. This foundation is complemented by a growing retail and granular franchise, indicating a strong position for future growth. Hence, we recommend HOLD. 

(Closing price as of January 07, 2025)