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Godrej Properties Ltd (GPL) is one of the leading real estate development companies based out of Mumbai. At present, it has real estate development projects in 10 cities in India which are at various stages of development. The company has total land reserves aggregating to 82.74 million square feet (sft)
of developable area and 50.21 million sft of saleable land.

Key Investment Highlights
Joint Development Model reduces vulnerability to the vagaries of realestate cycles – 77% of Godrej Properties Ltd development follows a joint development strategy which is not reliant on holding a large land bank. The
enters in to a profit sharing agreement with the land holders in which the land cost is valued at 0 and profit occurring out of the project is shared in the predetermine ratio. This model has the advantage of avoiding direct land dealings for the realty developer and locking up extensive capital in land, leaving funds
to meet working capital.

Strong Brand Image – The Godrej brand in instantly recognizable amongst the populace in India due to its long presence in the Indian Market and the diversified businesses in which the Godrej group operates. However the brand Godrej is owned by the parent company Godrej industries ltd and Godrej properties pays a royalty of 0.5% of the gross turnover for using the trademark and logo.

Strong order book and sustained cash flows- The company has a good track record in project execution and delivery. The good market response for the company's ongoing residential projects reflected by a high level of bookings and customer advances ensures sustained cash flow, paving the way for smooth completion of the on going projects. The company has sold about 1.02 million sq ft out of 1.26 million sq ft of saleable area of its ongoing projects, which have been launched. This excludes the Godrej Prakriti project at Kolkata,
which was launched in October 2009.

Issue details:
Listing NSE & BSE
Offer Open date December 09, 2009
Offer Close date December 11, 2009
Promoter
Godrej Industries Ltd
and Godrej & Boyce
Manufacturing Co Ltd
Price Band 490-530
Industry Construction
Website: http://www.godrejproperties.com
Equity Shares prior to issue (Cr) 6.04
Shares Offered (Cr) 0.94
Equity Shares Post Issue (Cr) 6.98
Shareholding Pre Issue Post Issue
Promoters 96.9 83.8
Others 3.1 16.2
Total 100.0 100.0
Financial Snapshot
Rs in crore H1FY10 FY09
Revenues 56.7 205.3
EBIDTA 68.6 115.4
Other Income 58.5 44.9
PBT 66.2 108.9
PAT 47.7 75.6
EPS 15.8* 12.5
* Annualized


Investors are advised to read the risk factors & more detailed information in the prospectus before investing in the issue.

Key Concerns
Declining Profit Margins
For the Half year ended H1FY2010, other income accounted for 50% of the total revenues of Rs 115 crore which helped the company maintain its bottom line. However the operating profit margins of the company has declined significantly to 18% in HYFY2010 from the 52 per cent and 34 per cent achieved in FY2008 and FY2009 respectively. The decline is attributable to the decline in commercial projects and increased focus on affordable residential projects that are ongoing or planned.

Valuation of offering not cheap
The company is offering its shares at an earnings multiples of 39.2x (lowerband) to 42.4x (upper band) which we believe is slightly on the higher side