Godrej Properties shares up over 2% after company announces reversal on DB Realty investment

Godrej Properties Limited's move to reverse its decision of investments in DB Realty has gone down well with the investors on Monday as the stock was trading in the green on Monday. The announcement from the company to invest Rs 700 cr in DB Realty did not augur well for Godrej Properties as the stock witnessed a massive selling pressure on Friday after the announcements was made.  

Shares of Godrej Properties were up 2.7 per cent on the NSE on Monday at 12:30 pm and were trading at 1547.45.

The decision of reversal came during the weekend and the stock witnessed a positive response from the investors on Monday, Zee Business' Kushal Gupta reported. The decision was taken in favour of the shareholders, he further said.    

Gupta said that Godrej Properties announced an investment of Rs 700 cr in DB Realty via different avenues on Friday. Out of this, Rs 400 crore was to be invested by Godrej Properties to buy 10 per cent stake in DB Realty. 

Apart from this, a JV (Joint Venture) between Godrej Properties and DB Realty was planned for a slum redevelopment project, in which the former would have invested Rs 300 crore out of the total Rs 700 crore investment. The JV was worth Rs 600 cr.

The decision even disappointed many brokerages including CLSA which maintained its Sell ratings for Godrej Properties but decreased the target from Rs 1563 to Rs 1424.

There was no need for Godrej Properties to enter the slum rehabilitation projects, the brokerage firm had opined. It had been said that the chances of default or stoppages were high in the slum redevelopment project.

Meanwhile, Jefferies Financial Group Inc's maintained a Buy on Godrej Properties, albeit significant revision in the price target from Rs 2750 to Rs 2000.

They also mentioned that the investment in DB Realty by Godrej Properties would have caused a major derating event for the Godrej Properties.

While the deal was considerably large, the minority shareholders did not like it.

So, after listening to the feedback from minority investors and brokerage firms, Godrej Property took the decision of reversing their announcement. Which explains the positive push towards Godrej Properties in the share market from investors, he said. 

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