In terms of business development, FY23 was the finest year for Godrej Properties. Pirojsha Godrej, executive chairperson of Godrej Properties, stated in the annual report that the company introduced 18 new projects with a new revenue potential of Rs 32,000 crore, or a 250 percent growth over FY22. Other key achievements for the most recent fiscal includes highest-ever collections of Rs 8,991 crore, a 41 percent spike “backed by strong project completions of over 10 million square feet.” Godrej outlined his targets for FY23 as well. “Our focus in the year ahead will be to exceed Rs 14,000 crore in booking value while delivering another record year for cash collections and project deliveries. A significant priority area for the company in the year ahead will be to launch our recently acquired projects in a timely manner and continue our strong performance on sales and deliveries,” he stated in the annual report.
According to him, the residential sector in India will continue its growth story in the years ahead and provide opportunities for leading developers to both participate in sectoral growth while also gaining market share. “These projects will play an important role in ensuring we are able to meet our aspiration of growing our sales at 20 percent a year while also providing us the opportunity to expand margin in line with our goal of achieving a return on equity of 20 percent.”
A report put out by Motilal Oswal last week says Godrej Properties is the only developer to achieve a booking value of more than Rs 20,000 crore a year across each of the four large markets of NCR, MMR, Bengaluru and Pune. “In FY23, the NCR market remained GPL’s top-performing, with yet another year of record sales. This was driven by robust responses to new launches and steady sustenance sales,” it said. On a year-to-date basis, Godrej Properties’ stock has gone up by over 36 percent.
Importantly, the report speaks of how the recent projects have a healthy margin profile. “While Godrej Properties’ legacy portfolio failed to deliver the desired level of profitability, projects signed after FY19 indicate improved profitability prospects. For instance, projects such as Hillside (Pune) and Oasis (NCR), which witnessed phased completion in FY21, generated a healthy adjusted EBITDA margin of 30 percent and 23 percent, respectively, indicating better underwriting of the projects,” it states. Going ahead, as the share of such projects improve in P&L, adds the report, the expectation is for the company to report substantial improvement in profitability with return on equity getting close to 13 percent by FY25. “Since FY21, the company’s business development mix has substantially skewed toward its own projects, boasting an operating profit margin exceeding 25 percent. As these projects are launched and completed in the medium term, the management expects the return on equity to increase to 20 percent.”
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