I have already written about Godrej Properties IPO. Just summarizing it here –(Please refer old postings for more details)
It is in the business of real estate development in India. It currently has real estate development projects in 10 cities in India, which are at various stages of development.
The proceeds of the issue will be used for acquisition of land development rights for forthcoming projects; construction of forthcoming project and repayment of loans. In an IPO press conference, the company said would use 30% of IPO funds to repay debt.
The company has land reserves of 391.04 acres, developable area of 82.74 million sqft and saleable area of 50.21 million sqft (including 27 million sqft in Ahmedabad).
The equity shares are proposed to be listed on the BSE and NSE. For the year ended March 31, 2009, the company reported profit after tax of Rs 74.74 crore on total income of Rs 188.13 crore. As on June 30, 2009, it has debt of Rs 745.78 crore on its books.
Investment Advisor S. P. Tulsian is not impressed with IPO pricing. His view is that Market-cap of GPL will be around Rs.3700 Cr but lots of mid-size companies with M-cap of Rs.1000-22000 Cr are available, in this space he likes Peninsula Land, Brigade Enterprise, Mahindra Lifespace, Marathon Nextgen realty. Further, GPL has posted Profit after tax of Rs.48 Cr on topline of Rs.125 Cr, even that has come from the sale of long term investments of about 58 Cr & so they haven’t got much from their core business.
Amit Dalal says that the investment in GPL will fetch good returns over a period of 2-3 years. He like the business model of GPL, but says that it is aggressively priced.
So overall, the IPO is looks a bit expensive as it is available at a P/E of around 37-39 whereas industry P/E is around 30. I would say that the investment for 2-3 years should be done. Also Godrej Ind holds around 80% stake in GPL, investment in it also may give you good returns. Last but not least, Godrej group is one of the oldest business groups of India and they have very good track record also.
