Godrej Properties Limited Q3 FY22 Earnings Conference Call Insights

Key highlights from Godrej Properties Limited (GODREJPROP) Q3 FY22 Earnings Concall

Management Update:

• The company commented that project completions and accounting revenue and profits to increase meaningfully in the quarters ahead.

• The company said, it has chosen to withdraw from Godrej Anandam in Nagpur and will not be pursuing the future phases of that project.

• Expects to launch a large number of new projects for residential sales in 4Q22.

Q&A Highlights:

• Parikshit Kandpal from HDFC Securities asked about the launch visibility and approval status of Banda, Worli, Ashok Vihar and Wadala project. Pirojsha Godrej replied that of the four projects, the two that are most imminent from a launch perspective are Ashok Vihar and Wadala, which is expected to launch by end of 4Q or early FY23. Worli is expected to launch in the later part of FY23. For Bandra, visibility is lower due to site clearance activity and other things.

• Parikshit Kandpal from HDFC Securities asked about the premium segment development plans in Mumbai and the company’s strategy for it as with DB Realty. Pirojsha Godrej said the company will have strong independent plans for growth in Mumbai, including through open land opportunities and direct JVs. However, in the slum redevelopment space there are complementary skills that DB Realty and GODREJPROP bring to the table.

• Adhidev Chattopadhyay from ICICI Securities enquired about the exclusivity clause with DB Realty of the company. Pirojsha Godrej said that the understanding is that the company will have a right of first refusal for all projects until the platform investment is consumed. Thereafter, if both sides are happy with the outcome, it can be continued to scale it and DB will be free thereafter to work with other partners.

• Adhidev Chattopadhyay from ICICI Securities asked about the total investment in the exited projects and how much the company would recover.  Rajendra Khetawat, CFO said that there is one project as Pune Bavdhan and the company has recovered the entire investment along with interest. In MMR, GODREJ incurred on the approval cost and other, so there was not much of an investment there. And in Anandam, Nagpur the development responsibility is handed over to a JV partner and the investment will be recovered from the project.

• Abhinav Sinha from Jefferies India asked about the launch pipeline for 4Q. Pirojsha Godrej answered that it is going to be a busy quarter for the company. The company has already launched or is in the process of launching four projects across the country and hope to do 10 launches during 4Q, and expects 4Q to be the best ever quarter for bookings.

•  Abhinav Sinha from Jefferies asked about pricing in different markets. Pirojsha Godrej said that the company has already taken price hikes already across projects and in most of the geographies. Most price hikes were taken to hedge the cost inflation that already happened last year. And the company is seeing good visibility on price hikes going forward.

• Mohit Agarwal from IIFL asked about the rationale behind the INR400 crore investment in DB Realty and what advantage does this investment give to GODREJ. Pirojsha Godrej replied that the combined structure offered a couple of advantages. One is the partnership DB has created with GODREJ and Prestige are value accretive for DB. This way GODREJ could participate in the upside. Also, this created the funding for DB’s investment into the platform.

• Mohit Agarwal from IIFL asked about the intention to do more than INR10,000 crores of pre-sales next year and if it’s on track. Pirojsha Godrej said that the INR10,000 crore is on track with additional projects added to the portfolio. The company added that it would like to see a new phase and Vikhroli will be part of that.

• An analyst from Motilal Oswal asked that of the identified projects the company has, is there works to be done or it’s ready to go. Pirojsha Godrej commented there is no ready to go projects, all of these require work and the company does not expect this to contribute to the launch pipeline for next financial year.

• Manish Jain from GormalOne asked about the business development strategy across India. Pirojsha Godrej said that it’s a mix of things and the company would like to keep thinking through new opportunities and new ways to capture them.