Godrej Properties Ltd. (GPL) has wrapped up FY25 on a resounding note, beating its own annual guidance across all major operational metrics. In its latest research update dated May 4, 2025, Motilal Oswal has reiterated a BUY rating on the stock with a revised target price of Rs 2,755, implying a potential upside of 22% from the CMP of Rs 2,249. Despite margin pressures, the brokerage remains confident about GPL’s ability to deliver on growth, cash flow, and earnings momentum over the medium term. With launches, collections, and deliveries hitting multi-year highs, the firm appears well-poised for a robust FY26.

Record Pre-sales and Launch Momentum Elevate FY25 Performance

Godrej Properties posted its highest-ever quarterly pre-sales at Rs 101.6 billion in 4QFY25, translating to a volume of 7.5 million square feet (msf). This marked an 87% sequential jump and a 7% year-over-year increase in value despite an 8% volume dip YoY.

For the full year, pre-sales climbed 31% YoY to Rs 294 billion, exceeding both internal estimates and guidance. Projects in NCR, MMR, and Bengaluru contributed 80% of sales, underscoring the developer’s growing footprint in high-value markets.

Launch activity remained aggressive with 34 new projects spanning 29.2 msf and a gross development value (GDV) of Rs 366 billion, which is 122% of the FY25 launch guidance. The company plans an even more ambitious launch pipeline of Rs 400 billion for FY26.

Robust Business Development and Delivery Execution

GPL added 14 projects in FY25 totaling 19 msf of saleable area and a GDV of Rs 264.5 billion, outpacing its guidance by 32%. In 4Q alone, two projects with a GDV of Rs 30 billion were added.

The company delivered 6.5 msf in FY25—a 23% beat over its annual delivery guidance. Four projects with leasable area of 4.3 msf received occupancy certificates, signaling completion readiness.

Cash Flow Performance and Debt Management Impress

Operating cash flow surged 73% YoY to Rs 74.8 billion in FY25, and Rs 40.5 billion in 4QFY25 alone—up 55% YoY. Gross collections also grew 43% YoY to Rs 76.4 billion.

Despite spending Rs 26.8 billion on land investments and approvals, the company reported a cash surplus of Rs 5.8 billion and cut its net debt to Rs 33 billion. This brought net D/E ratio down to 0.19x from 0.23x in Dec’24.

A Rs 20 billion fundraise via NCDs has been approved for 4QFY25, supplementing the Rs 60 billion equity capital raised through QIP in the prior quarter.

Financial Highlights: Revenue Surge, Margin Headwinds

Revenue for 4QFY25 came in at Rs 21.2 billion, up 49% YoY and 3x higher than estimates, on the back of strong delivery volumes. FY25 revenue stood at Rs 49.2 billion, up 62% YoY.

EBITDA, however, declined 10% YoY in 4QFY25 to Rs 1.1 billion, impacted by a sharp rise in raw material costs. FY25 EBITDA stood at Rs 444 million, reflecting a margin of just 0.9%—though a meaningful recovery from last year’s negative margin.

PAT for FY25 rose 86% YoY to Rs 13.9 billion, broadly in line with expectations. Margins remained solid at 28.2%.

FY26 Guidance Reflects Continued Optimism

The company has laid out ambitious guidance for FY26, targeting:

Pre-sales of Rs 325 billion (+11% YoY)

Launches worth Rs 400 billion (+9% YoY)

Collections of Rs 210 billion (+23% YoY)

Deliveries of 10 msf

Business Development value of Rs 200 billion

The management remains upbeat about sustaining growth momentum in its key markets: Mumbai, NCR, Pune, and Bengaluru, while also scaling presence in Hyderabad and plotted development segments.

Valuation Methodology and Investment View

Motilal Oswal’s revised target price of Rs 2,755 is based on a sum-of-the-parts (SoTP) valuation, which includes:

DCF valuation for residential and JV projects,

NAV-based valuation for commercial and DM projects (discounted at 10% WACC),

A 75% premium to gross asset value (GAV) for growth and going concern.

This arrives at a net asset value of Rs 829 billion or Rs 2,755/share, reflecting a 22% upside from the current levels.

Strategic Takeaway for Investors

Despite temporary margin headwinds, Godrej Properties continues to command leadership in India's premium real estate landscape. With record pre-sales, a healthy delivery pipeline, and disciplined capital allocation, the firm is well-positioned to scale new heights in FY26.

Investors may consider entering at current levels of Rs 2,249, with a target of Rs 2,755, as advised by Motilal Oswal. Sustained execution, rising cash flows, and prudent debt management support the bullish outlook.