Icra enhances Godrej Properties’ bank limit to ₹4,500 crore

The agency has reaffirmed AA+ rating and stable outlook on its long term instruments.

“The reaffirmation of ratings of Godrej Properties Limited (GPL) considers the sustained improvement in its profitability metrics, driven by favourable and diverse mix of project development models and robust growth in cash flows on the back of scale up in operations. The improvement in profitability is expected to sustain going forward, supported by the healthy pipeline of projects to be delivered over the near to medium term. The increasing share of interest and service income from joint venture (JV) entities as well as the recent increase in price realisations will also support the profitability. The company has been steadily building pipeline, aided by capital raised during FY2019-FY2021, which provides medium-to-long-term revenue visibility,” it said.

In FY22, GPL’s collections increased to ₹6,644 crore from ₹4,012 crore a year ago. The sales booking for FY22 rose 17% year on year to ₹7,861 crore. GPL is estimated to record sales booking of over ₹10,000 crore in FY23. As per ICRA’s estimates, the pending receivables from the sold inventory at the end of 31 March was around ₹12,000 crore, offering healthy medium-term cash flow visibility.

GPL’s consolidated net debt stood at ₹3,844 crore as on 31 March 2022. ICRA estimates the leverage to remain comfortable as reflected by net debt below 2 times over the medium term. While it reported cash and liquid investments worth ₹4,707 crore as on 31 March 2022, a major portion of the same is earmarked for growth/investments.

Icra noted that GPL would expand its ongoing portfolio at a faster pace over the medium term, supported by the available growth capital. “It plans to launch over 20 million square feet (msf) of new projects and new phases in existing projects in the current fiscal. The company’s ability to ramp-up the execution and deliveries in line with proposed expansion of the portfolio will remain a key monitorable. Nevertheless, Icra expects GPL to benefit from its strong brand and the favourable demand environment in the residential real estate market,” the rating agency said.

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