Godrej Properties To Invest Over $1 Bn In Next Couple Of Years: Chairman

Realty firm Godrej Properties Ltd (GPL) plans to invest more than USD 1 billion over the next couple of years to acquire and develop new projects as part of its target to achieve higher growth, its Executive Chairman Pirojsha Godrej has said.

Addressing shareholders in the company's annual report, he highlighted that, for the first time, Godrej Properties was "India's largest developer by the value and volume of sales it achieved."

The company's sales bookings grew 14 per cent to a record Rs 6,725 crore last fiscal despite adverse impact of the COVID pandemic, surpassing nearly Rs 6,000 crore clocked by Macrotech Developers (erstwhile Lodha Developers.)

The executive chairman highlighted that the company in March raised Rs 3,750 crore through Qualified Institutional Placement (QIP) process.

"Our QIP in March raised Rs 3,750 crore, and allowed your company to end the year with a net cash balance sheet," he said.

Pirojsha pointed out that the business development in 2020-21 fiscal year was moderate, as the company adopted a wait-and-watch approach in the first half because of the pandemic.

However, he expects FY 2021-22 to be a strong year for business development.

"The equity we have raised and the flexibility this provides our balance sheet will allow us to invest over one billion USD into new projects over the next couple of years," said Pirojsha.

This will be substantially more than what the company has invested at any time in its past, he said, adding that the investment will allow the company to significantly accelerate its growth ambitions.

"We expect to see this play a role both in ensuring we scale our revenues rapidly and also continue to improve the margin profile of our business by improving GPL's economic interest in each project," Pirojsha said.

To expand its business, GPL buys land outright from the market and also partners with land owners to add more projects to its portfolio for future development.

Pirojsha said the company remains committed to two medium-term goals of consistently being among the leading developers by the value of housing sales in each of its focus markets and achieving a Return on Equity (RoE) in excess of 20 per cent.

GPL focuses majorly on four markets-- Mumbai, Pune, Bengaluru and Delhi-NCR. It sold properties of more than Rs 1,300 crore in each of the four focus markets last fiscal.

"The progress in market share gains has been encouraging, and combined with sustained momentum in new project additions, puts us on track for the first of our two medium-term goals," he said.

Pirojsha termed the target of delivering ROEs in excess of 20 per cent as challenging.

However, he said: "Here again, we believe we remain on track and that the combination of higher sales volumes, greater share of profits in each project, faster construction timelines, and strong customer satisfaction will get us to this objective."

Pirojsha said the company posted loss during FY'21 and the ROEs would remain muted this fiscal.

"However, we remain confident that the steps we have taken to strengthen your company's balance sheet, enhance its project pipeline, and build its execution capabilities will help us ensure high returns, lower risk, and strong growth," he told shareholders.

The company expect to see a meaningful uptick in reported earnings from next year, he added.

Pirojsha stated that India is now emerging from the second wave and it is cautiously optimistic that the worst of the pandemic is behind us.

"With vaccinations picking up pace considerably, and with high levels of previous infection also providing protection, I'm hopeful that any subsequent wave of the pandemic will not be as devastating as the second wave in April and May," he told shareholders.

To meet the challenges posed by the pandemic, Pirojsha said the company quickly adopted digital sales tools including virtual site visits, an online sales portal, and in-house data analytics.

The company will hold its annual general meeting on August 3.

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