Godrej Properties - Wins a redevelopment project in Ghatkopar: Edelweiss

We view Godrej Properties’ (GPL) 185,000 sf Ghatkopar township project to be positively impacting NAV by ~1.5%. However, considering that GPL is trading at a 9% premium to NAV which, we believe, is unjustified given the pressures on its business, we maintain ‘REDUCE/SU’ rating on the stock.

Event: GPL has signed an agreement to redevelop a private society owned property in Ghatkopar, Mumbai, through its wholly owned subsidiary, Godrej Projects Development Private Limited (GPDPL). The project will have an estimated free saleable area of 185,000 sft. As part of the agreement with the society, 139 existing tenants will be rehabilitated as part of this project.

Analysis: This project is located off LBS Marg at Ghatkopar, a prime residential locality in Mumbai with selling prices around ~INR12,000 – 13,000 psf. Besides cost of construction of ~INR 3,000 psf, GPL would have to incur the cost of construction for rehabilitation of existing tenants.

Our view: Initial estimates suggest that the NAV would get positively impacted by a maximum of 1.5%-2.0% (on our current NAV of INR468). Considering that the stock is trading at a 9% premium to NAV which, we believe, is unjustified given the pressures on its business, we maintain ‘REDUCE/SU’ rating on the stock.

EdelFlash: Godrej Properties - Wins a redevelopment project in Ghatkopar

Regards,

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