MUMBAI: Godrej Properties listed at at Rs 511, at a 5% premium to its issue price of Rs 490, on the NSE . 

Subscription level

QIB     7.4x
NII     0.41x
RII     0.3x
Total    4x
Issue price fixed at Rs 490

IPO details

No of shares:                          94.29 lakh
Issue size (Upper band)  :    Rs 499.8 crore
Issue size (Lower band)  :    Rs 462  crore
IPO date                 :                 Dec9 - Dec11
Parent company, Godrej Industries, holds 80.26% stake in the company
To offload 13.5% of the post issue paid-up capital of the company

IPO proceeds

To deploy Rs 203 cr to acquire land development rights for three projects
To utilise Rs75 crore for the construction cost of a commercial project in Chandigarh
Would use Rs 172 crore to repay part of its Rs 800 crore debt

Land reserves

Total land reserve currently stand at 391.04 acres
Has a developable area of 82.74 million sq ft, 50.21 million sq ft of saleable area
Company, on its own, has less than 3 million sq ft of its total land bank of 82.74 million sq ft
Till date, it has completed 23 projects comprising over 5 million sq ft
Two third of the projects are residential, the rest commercial
To focus more towards mid-income housing or affordable housing

 

Business model

Follows a joint development model with land owners
Company, on its own, has less than 3 million sq ft of its total land bank of 82.74 million sq ft
Has an MoU with Godrej and Boyce for land development at Mohali and Hyderabad
No plans land bank acquisition plans
All development work would be undertaken in JVs

Brokerage view
Negatives

Analyst community has mixed views on subscription
CLSA values NAV at 1% premium to the issue price at Rs 493 per share
CLSA expect P/E to reach 20x, stock to trade above Rs 500
Edelweiss and Angel see NAV at a discount of 4-5%
Nearly three-fourth of land bank in Ahmedabad and Hyderabad
Ahmedabad land bank accounts for 57% of the valuation
Saleable area to be developed by 2017
Any delay in these projects could hit valuations
Two-year delay in completion of these projects could reduce NPV to Rs 413

Positives

Joint development model
Model avoids locking up of extensive capital in land
Saves upfront cost of the company
Around 80% of existing land bank will be executed through JVs