GODREJPROP - Godrej Properties Limited Share Price

Godrej Properties Limited's management provided a highly optimistic outlook for the fiscal year 2026 (FY26), projecting growth in residential bookings to over Rs. 32,500 crores, marking a 20% increase from the previous year's guidance. They plan to launch over Rs. 40,000 crores worth of inventory, combining new projects and strong sustained sales. The management emphasized their confidence in maintaining rapid growth in operating cash flows, supported by robust project deliveries and a favorable market environment.

In FY25, Godrej achieved record-breaking figures, with total booking value at Rs. 29,444 crores"”an increase of 31% year-on-year"”and collections of Rs. 17,047 crores, reflecting a 49% year-on-year increase. The company's operating cash flow reached Rs. 7,484 crores, a 73% increase, enabling significant reinvestment in future growth. For the fourth quarter alone, the company recorded the highest ever booking value of Rs. 10,163 crores, driven by strong demand from new project launches across various cities.

The management underscored their business development success, having added 14 new projects expected to yield a booking value of approximately Rs. 26,450 crores, achieving 132% of their annual business development guidance. They noted their unique market position, with only 27% of booking value coming from their home market of Mumbai and a balanced distribution across other metropolitan areas.

Looking ahead, the company intends to continue executing a strong launch pipeline and maintain a focus on strategic growth in each of their operational markets. The management highlighted that despite potential macroeconomic uncertainties, they remain committed to outperforming their guidance and capitalizing on growth opportunities, which they believe will be pivotal to their sustained performance in the upcoming fiscal year.

1. Question: "So, is it more like you are guiding conservatively and looking to outperform to the 20% number or is it like because of the current market condition you think that 10%-11% growth is what we can achieve?"
Answer: "We aim for a realistic guidance due to the inherent uncertainties in our industry. A 20% growth over last year is strong, and while we strive for outperformance, we also want to maintain credibility with investors. We've consistently met our guidance over the past three years, and we are optimistic about demand continuing to drive our performance."

2. Question: "Do you think that even in this year when we have guided for sales, these two markets"”NCR and MMR"”can grow or are they at optimal levels?"
Answer: "I believe growth opportunities remain in all markets we operate in. Both NCR and MMR have shown consistent sales growth, and we have a solid project pipeline that supports our goals. While NCR has seen significant sales, we anticipate room for further growth. Our strategy includes enhancing our market share and addressing the demand across all regions."

3. Question: "Do you think the mix is now moving towards more profitable projects and more recent projects?"
Answer: "Yes, we expect improved margins as our newer projects hit the P&L, particularly those launched at premium price points. While we're currently using project completion accounting, we anticipate better profitability as these projects reflect their success in our financial results, especially around FY28."

4. Question: "Do you think this would be driven more by volume or is there still room for value to grow?"
Answer: "We expect growth to come from both volume and pricing. While the market dynamics can influence our product launches, we're optimistic about a balanced mix of both, particularly if we launch premium projects that can significantly boost our average realizations."

5. Question: "If you can also comment on how your construction cost is going to trend from current levels?"
Answer: "Currently, cost inflation has been stable. While some materials have seen price fluctuations, overall, we expect construction costs to remain manageable. We will remain vigilant on macroeconomic factors, especially oil prices, that could affect costs in the future, but thus far, the environment appears favorable."

6. Question: "On the business development side, any thoughts on how one should think about it?"
Answer: "We believe our current guidance for business development may be conservative. Traditionally, we have exceeded our previous targets by a substantial margin. We're confident in our opportunities but prefer to under-promise and over-deliver, especially considering the uncertain market conditions."

7. Question: "Does this include Ashok Vihar and the Bandra project? If you can update on both the projects, please."
Answer: "Yes, both projects are included in our launch plans. However, delays in approvals can affect timelines. We're optimistic about launching Ashok Vihar this year, while the Bandra project may take longer due to site clearance issues. We're addressing these challenges to ensure progress."

8. Question: "What percentage of our sales would have come from available inventory or sustenance sales?"
Answer: "Approximately 65% to 70% of our sales this year came from new launches, with the remainder from existing inventory or sustenance sales. This reflects our strategy of consistently introducing fresh offerings to the market."

9. Question: "How much margin should we have even if the project is a faster turnaround due to risks?"
Answer: "Historically, we target a PAT margin of 10% to 15%. For quicker-turn projects, we aim for at least 15% margins, while plotted developments may achieve even higher margins. This ensures that we maintain profitability even with expedited timelines."

10. Question: "Is the firm going to be cash flow positive at the FCF level?"
Answer: "Operating cash flow will depend on our business development activities. If we meet our guidance, we should remain cash flow positive post-business development as we anticipate strong collections. Our goal is to keep net debt below Rs. 10,000 crores while investing more capital for growth."