Godrej Properties shares drop after 45% rise in Q1 net debt on aggressive land purchasing

Shares of Godrej Properties dropped in morning trade on Friday after the company in an investor presentation disclosed that its net debt in the quarter ending June 30, 2023, increased 45 per cent quarter-on-quarter to Rs 5,298 crore due to aggressive land purchasing across major cities.

The company’s debt-to-equity ratio stood at 0.56 in April-June period. Since last year, most of the debt was serviced to purchase 18 land parcels, with most of them located in Delhi-NCR, Mumbai Metropolitan Region (MMR), Pune and Bengaluru, the real estate arm of Godrej group said.   

The total sales potential of all these projects stands at Rs 32,000 crore. In Q1FY24 alone, Godrej Properties acquired 3.7 million square feet in four land parcels with an expected booking value of Rs 6,450 crore.

Further increase in debt expected

When asked whether the debt is set to rise further for the company, Godrej Properties Executive Chairman Pirojsha Godrej said that there will be some further increase in the coming quarters.

"I think you will see some increase...given the business development over the next couple of quarters. But we think thereafter next year, we think the calendar 2024 is when there's a lot of these project launches happening. We expect very strong positive operating cash flows," Pirojsha explained.

Earlier this month he had stated during the earnings call presentation that despite muted real estate sales the company was still looking to hit the Rs 14,000 crore sales figure for FY24.

However, despite seeing its profits and revenue increase year-on-year in its latest financial earnings, a sequential decline from the previous quarter has meant that Godrej Properties has seen a decline of over 5 per cent over the previous month-long period.

Shares of Godrej Properties were trading at Rs 1,530 apiece, down 1.17 per cent, on BSE at 11:16 AM.