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Dolat Capital Report
Godrej Properties Ltd.'s project deliveries for the quarter came-in at 4.9 million square feet; accounting for ~40% / 50% of FY24 guidance / FY23 respectively. This aided overall collections of Rs 19.5 billion; up 26% YoY and sustaining collections to presales ratio of ~90%.
Godrej Properties core free cash flow (ex-growth capex but adjusted for joint venture projects) for the quarter was tepid at Rs 1 billion on account of lower presales (down 45% QoQ / 11% YoY) and steady run-rate of construction spend (~Rs 10 billion; 42% of presales versus 29% in FY23). 
The developer added four new projects (100% ownership) amounting to a gross development value of Rs 65 billion.
We note that the cost of acquisition paid for the land is high at ~22% of GDV versus less than 15% (estimated) in FY23 - please refer to our note New supply ‘war chest' is margin and cashflow accretive; upgrade to 'Accumulate').
However, we anticipate higher velocity for these projects on account of prime location resulting in a faster cash conversion cycle.
Also, higher implied average selling price of Rs 18,000/square feet versus Rs 11 k/sqft for FY23 will likely protect margin profile.
Overall, the execution gap to peers is narrowing and remains on track to deliver on FY24 guidance of 12.5 msf in project completion. High value project pipeline, improving micro market selection and rising economic share is set to aid margin and cashflow profile.
Retain our ‘Accumulate' rating with a revised March 2024 target price of Rs 1,850 (versus Rs 1,500).
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