Godrej Properties Limited — Q3 FY25 earnings call

Call held 4 Feb 2025

Management summary

Godrej Properties reported a strong Q3 FY25 and record Calendar Year 2024 performance, driven by robust booking values, significant equity infusion, and improved debt metrics. While Q3 booking value saw a slight YoY dip and collections were softer QoQ, the company remains confident in exceeding its annual guidance, supported by a strong Q4 launch pipeline and strategic land acquisitions.

Highlights

  • 9M FY25 Booking value reached INR19,281 crores, a 48% YoY growth, achieving 71% of annual guidance.

  • Q3 FY25 Net Profit increased by 161% YoY to INR163 crores, with EBITDA growing 85% to INR280 crores.

  • Calendar Year 2024 saw record booking value of INR28,800 crores (69% YoY growth) and net profit of INR1,489 crores (124% YoY growth).

  • Net debt-to-equity ratio significantly improved to 0.23 from 0.72 at the start of the calendar year, following a INR6,000 crores equity raise.

  • Added 16 new projects in CY24 with an estimated booking value potential of INR36,250 crores, replenishing more than what was sold.

Concerns

  • Q3 FY25 booking value declined 5% YoY to INR5,446 crores, though it grew 5% QoQ.

  • Q3 FY25 collections (INR3,069 crores) and operating cash flow (INR615 crores) saw a quarter-on-quarter decline due to lower deliveries.

  • Launch of Worli project remains uncertain for Q4 FY25, potentially slipping to Q1 FY26 due to approval delays.

Key financials

2 periods

Q3 FY25

  • Total Income
    ₹1,222 Cr
    YoY +133%
  • EBITDA
    ₹280 Cr
    YoY +85%
  • Net Profit
    ₹163 Cr
    YoY +161%

9M FY25

  • Total Income
    ₹4,203 Cr
    YoY +74%
  • EBITDA
    ₹1,336 Cr
    YoY +144%
  • Net Profit
    ₹1,018 Cr
    YoY +301%

What they filed

Q1 FY27: revenue up 14.2%, net profit up 8.9% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue663 185 912 106 92 −86%268 +45%928 +2%121 +14%
EBITDA-40 -181 77 -263 -408 −920%-175 +3%-27 −135%-260 +1%
Net profit206 35 279 56 13 −94%60 +71%219 −22%61 +9%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Order book

high confidence

Total value

₹19,281 Cr

as of 2024-12-31 quantified

48% YoY

Inflow this quarter

₹5,446 Cr

Composition

  • Mumbai region (geography) ₹5,155 Cr

Pipeline

other

New projects added in CY24 with estimated saleable area and booking value potential.

Calendar year 2024 was a record-breaking year for Godrej Properties with the highest ever booking value and volume achieved by any listed real estate developer in India. The company has a strong launch portfolio for Q4 FY25.

Source: Prepared remarks

Capital allocation

high confidence
  • Debt Debt disclosed
    As a result, our net debt-to-equity ratio has improved to 0.23 from 0.72 at the start of the calendar year.

Guidance & targets

Booking Value

  • Annual Booking Value Booking Value · FY25 · High confidence Meeting and exceeding guidance
    GPL has now achieved 71% of its annual guidance for booking value for FY '25. So we remain confident of meeting and exceeding our guidance for the year.

    — Pirojsha Godrej

Business Development

  • Annual Booking Value Potential from New Projects Business Development · FY25 · High confidence INR20,000 crores
    From a business development perspective, I'm happy to announce that Godrej Properties has added 12 new projects in the year-to-date, with a total estimated saleable area of approximately 16.9 million square feet and total estimated booking value potential of INR23,450 crores as against our annual guidance of INR20,000 crores.

    — Pirojsha Godrej

Debt

  • Net Debt Debt · High confidence Under INR10,000 crores
    So we would like to have an upper cap of about INR10,000 crores of net debt and currently our gearing is about 0.23.

    — Gaurav Pandey

What to watch in Q4 FY25

Q4 FY25 Booking Value

Next quarter (Q4 FY25)
Current 71% of annual guidance achieved for 9M FY25
Target Meet or exceed annual guidance

Why it matters

This will determine if the company achieves its full-year sales targets and maintains growth momentum.

GPL has now achieved 71% of its annual guidance for booking value for FY '25. So we remain confident of meeting and exceeding our guidance for the year.

Risks & concerns

  • Regulatory approval delays for project launches

    medium

    Launch of Worli project is 50-50 for Q4 FY25 or Q1 FY26 due to uncertainty on final approval time; buffers are kept in guidance for such uncertainties.

    We're still hoping to get it done this year. But I think the reason we haven't mentioned that as one of the launches is there is some uncertainty on final approval time. Very advanced stage of approval, so we are still hopeful we will get the approval. But then, to get the approval also, if we can't start getting through March to get the approvals, we may choose to launch it next year so that we have a few weeks to get to launch fully planned and prepared.

    Management acknowledged

  • Potential demand weakness or margin pressure

    low

    Analyst asked if demand is weakening or margins are under pressure; management stated markets remain strong, sales are at attractive price points, and margins should expand.

    I think we're continuing to see very strong market, frankly... I think these are all indications to us that markets remain strong. We've also been looking at pricing. So these are not these are strong sales at attractive price points above what we underwrote. So in that sense, margin should expand as a result of these.

    Analyst downplayed

  • Oversupply in Golf Course Road micro-market

    low

    Analyst raised concerns about potential oversupply; management clarified Golf Course Road is a 'margin expansion play' for aspirational buyers, distinct from other segments, mitigating oversupply risk.

    I'm not really worried about it. I'm not really targeting a booking value play from Golf Course Road project. I'm looking more from a value accretive and strong margin profile kind of a play.

    Analyst downplayed

Q&A highlights

8 direct
Sustenance sales momentum and confidence in meeting guidance Direct
I think we think we've seen pretty strong track record of consistent sales. As I mentioned in my remarks, last quarter was the sixth consecutive quarter we've been able to sell over INR5,000 crores worth of inventory. I think that's an industry record. Similarly, we sold had sales of over INR500 crores across 5 cities in all parts of the country. So we do see this sales growth has been quite sustainable.

Analyst questioned the sustainability of sales and the company's ability to meet guidance, which management addressed by highlighting consistent performance and a strong Q4 launch pipeline.

Asked by Puneet from HSBC

Q4 launch pipeline and strategy Direct
Thanks, Pritesh. Pritesh, just to give you a sort of insight into our Q4 launch calendar and subject to, of course, some of these are in approval stages, but some head start, like Sector 44 Noida, which is the central CBD market of Noida, we will have a -- hopefully, a big blockbuster launch over there.

Analyst sought details on upcoming launches, which are crucial for future booking value, and management provided a comprehensive list of projects across various cities.

Asked by Pritesh Sheth from Axis Capital

Demand weakness, margin pressure, and Q3 collections softness Direct
I think we're continuing to see very strong market, frankly. As I mentioned earlier, we've seen INR500 crores plus launches across five cities in all parts of the country. We have seen 6 consecutive quarters INR5,000 crores plus sales. So I think these are all indications to us that markets remain strong.

Analyst probed potential market weaknesses and margin concerns, which management confidently refuted by citing strong sales performance and strategic pricing.

Asked by Praveen Choudhary from Morgan Stanley

Q3 collections and operating cash flow decline Direct
That's nothing too important here, Praveen. I think we expect a very, very strong Q4. I think it was a little bit lower number of deliveries. We only had a couple of million square feet of deliveries of that part of the commercial projects with no collection on. So there tends to be a little bit lumpy linked to deliveries, which we will see quite a few of in the fourth quarter.

Analyst questioned the dip in Q3 cash flows, and management explained it was due to lower deliveries and anticipated a strong rebound in Q4.

Asked by Praveen Choudhary from Morgan Stanley

Business development strategy and net gearing Direct
I think there are a few guiding principles that we have kind of set for ourselves, right? One is that we want to have very robust risk management, which is why we did QIP to manage growth and risk very well. So we would like to have an upper cap of about INR10,000 crores of net debt and currently our gearing is about 0.23.

Analyst inquired about future BD plans and debt management, and management outlined a clear strategy for growth while maintaining a conservative debt-to-equity ratio.

Asked by Abhinav Sinha from Jefferies India

NCR market and Golf Course Road oversupply risk Direct
Kunal, this is a wonderful question. Actually, every market, you tend to have a different long-term strategy. Like I was mentioning some time back, for us, Golf Course Road is a pure margin expansion play. So we have a lot of inventory in Gurgaon, which is more about asset turnover play.

Analyst raised a critical sector-specific concern about oversupply in a key market, which management addressed by differentiating market segments and strategic focus.

Asked by Kunal Lakhan from CLSA

Contribution of new launches to presales Direct
Parikshit, to your question, new launches to presale is like 70% for 9 months and 68% for the quarter.

Analyst sought clarification on the impact of new launches, a key driver for real estate sales, and management provided specific percentages.

Asked by Parikshit Kandpal from HDFC Securities

Project approval timelines and launch efficiency Direct
So similarly, I think the teams have built very strong capabilities in terms of designing quickly, understanding the market, working with government departments to get approvals on a timely basis. So I'd say that wasn't a particular skill of the company a few years ago. I think we've gotten better and better at that.

Analyst questioned the efficiency of project approvals, a common challenge in the sector, and management highlighted improvements in their internal processes.

Asked by Parikshit Kandpal from HDFC Securities

3 min read 7 chapters

Detailed narrative

Record Performance in Calendar Year 2024

Godrej Properties achieved its highest ever booking value of INR28,800 crores in Calendar Year 2024, representing a 69% year-on-year growth. This was driven by the sale of 26.38 million square feet, a 54% volume growth. The company also reported its highest ever net profit of INR1,489 crores, marking a 124% year-on-year increase. Additionally, 18 million square feet of projects were delivered across 7 cities during this period.

Strong 9M FY25 and Q3 FY25 Financials

For the first nine months of FY25, Godrej Properties recorded a booking value of INR19,281 crores, a 48% growth year-on-year, achieving 71% of its annual guidance. Collections for 9M FY25 grew 50% to INR10,086 crores, and operating cash flow increased 99% to INR3,436 crores. In Q3 FY25, total income rose 133% to INR1,222 crores, EBITDA increased 85% to INR280 crores, and net profit grew 161% to INR163 crores.

Robust Launch Pipeline for Q4 FY25

Despite a 5% year-on-year decline in Q3 FY25 booking value to INR5,446 crores, the company maintains confidence in exceeding its annual guidance due to a strong Q4 launch pipeline. Upcoming launches include projects in Noida (Sector 44), Gurgaon (Golf Course Road, Sector 54), Bangalore, Pune (Hinjewadi), Indore, and a retail phase in Mumbai. Management noted that tactical delays for launches, such as waiting for post-Makar Sankranti period, are sometimes employed for optimal market timing and profit margins.

Strategic Capital Allocation and Debt Management

The company successfully raised INR6,000 crores of equity through a QIP, leading to a significant improvement in its net debt-to-equity ratio from 0.72 at the start of CY24 to 0.23. Management aims to maintain an upper cap of net debt at INR10,000 crores, providing substantial headroom for future growth and acquisitions. Business development is described as analytical and calibrated, focusing on value-accretive opportunities rather than being deployment-pressure driven.

Market Dynamics and Premiumization Focus

Godrej Properties observed strong market growth in Bangalore and Mumbai, with 9-month numbers doubling and growing 100% respectively. The company is increasingly focusing on premium and luxury segments, particularly in markets like Gurgaon's Golf Course Road, which is seen as a 'margin expansion play' rather than a volume-driven one. Management expressed confidence that these aspirational markets are less susceptible to oversupply risks due to distinct customer segments.

Project Approvals and Execution Efficiency

While regulatory approvals can sometimes lead to launch delays, such as the Worli project potentially slipping from Q4 FY25 to Q1 FY26, management highlighted significant improvements in the company's capabilities for design, approvals, and timely project launches. They expressed satisfaction with the current timeframes for bringing projects to market, despite the inherent uncertainties in the approval process.

Collections and Cash Flow Outlook

Q3 FY25 saw a quarter-on-quarter decline in collections (INR3,069 crores) and operating cash flow (INR615 crores), which was attributed to a lower number of project deliveries during the quarter. However, with a substantial pipeline of deliveries and construction milestones planned for Q4 FY25, the company anticipates a sharp growth in both collections and operating cash flow in the upcoming quarter.

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