Neutral on Godrej Properties Ltd - Motilal Oswal

Godrej Properties (GPL IN; Mkt Cap USD0.9b, CMP Rs590, Neutral)

Godrej Properties (GPL) reported lower than expected numbers for 3QFY11. While revenue declined 44% YoY to Rs482m, reported PAT declined 13% YoY.

EBITDA declined ~90% YoY to Rs65m; EBITDA margin expanded from 4.4% in 2QFY11 and 3.2% in 1QFY11 to 13.5%.

During 3QFY11, GPL launched four residential projects and one commercial project. It achieved strong momentum in sales, primarily due to its new launches.

As at December 2010, GPL's gross debt increased to Rs8.7b, while net debt stood at Rs6.6b.

Due to delay in monetization of some key projects, Motilal Oswal is revising the FY11 EPS estimate to Rs16.3. We have rolled over our NAV estimate to FY13 at Rs777, while our FY12E NAV is revised to Rs686. We expect GPL to trade at premium to NAV due to its strong growth visibility, asset-light model and brand equity. It is valued at 3.5x FY12E BV of Rs170 and 14.9x FY12E EPS of Rs39.5. Maintain Neutral with one-year forward target price of Rs700 (10% discount to FY13E NAV).

Source : Equity Bulls

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