Shares of Godrej Properties were up 1.93% on the NSE on October 26 after Nomura upgraded the stock to 'Buy' from 'Neutral', saying the risk-reward had turned attractive following a sharp correction.
The stock was trading at Rs 1,525.40 at 11:37 am. Nomura lowered its target price to Rs 1,900 from Rs 2,100.
Godrej Properties has corrected 26% year to date, compared with a 13% decline in the Nifty 50. In its October 25 report, Nomura said the company should consistently deliver around 15% pre-sales growth, supported by its ability to drive sales across regions and price points, leading to continued market share gains. It also expects the company to consistently generate free cash flow (FCF) from FY28, moderating the pace of net debt growth.
Godrej Properties trades at a premium of around 25% to net asset value (NAV), against Nomura's expectation of around 60%. "This suggests the stock has priced in most of the negatives," the brokerage said. It lowered its sum-of-the-parts-based target price, factoring in a higher weighted average cost of capital of 13.5%, against 12.5% previously, to account for ongoing volatility. A key risk is a slowdown in India's real estate market due to a prolonged Middle East war.
Godrej Properties reported pre-sales of Rs 80 billion in Q2FY27, ahead of Nomura's estimate of Rs 73 billion. Sustenance sales of around Rs 50 billion contributed about 63% of pre-sales, while new launch sales stood at around Rs 30 billion.