Luxury, land, and a Rs 90,000 crore pipeline: Is Godrej Properties still a buy?

Indian Express

a day ago

Godrej Properties has been one of the most closely watched names in India's listed real estate space.
The stock's 10-year journey shows a steady climb in the early years, followed by a sharp acceleration from 2023 into mid-2024 when it touched record highs above Rs 3,200. Since then, the share price has corrected and now trades mostly between Rs 2,000 and Rs 2,400.
This reflects a market reassessment of growth expectations after a period of extraordinary momentum.
The latest quarterly numbers offer insight into how the business is positioned in this new phase.
In Q1 FY26, the company reported bookings worth Rs 7,082 crore from the sale of 4,231 homes, covering 6.17 million square feet. This was the eighth consecutive quarter above the Rs 5,000 crore-mark and represented a two-year compounded growth rate of 77 per cent, even though it was lower than the same period last year.
The sales mix was broad, with Bengaluru contributing over Rs 3,000 crore, and both the Mumbai region and NCR crossing Rs 1,600 crore each.
Collections stood at Rs 3,670 crore, a 22 per cent rise from a year ago, reinforcing the company's ability to turn bookings into cash.
On the profit side, Godrej Properties delivered its highest-ever quarterly net profit of Rs 600 crore, up 15 per cent year-on-year, on a total income of Rs 1,593 crore. Earnings before interest, tax, depreciation and amortisation (EBITDA) grew 18 per cent to Rs 915 crore, aided by strong sell-through on new launches and cost control.
For investors, the data confirms that the business fundamentals remain strong. Yet, the flat share price suggests lingering questions: is the growth pace slowing, is the premium valuation already pricing in the next few years, or is the broader housing cycle entering a more balanced phase?
Business model and margins: Making sense of the numbers
Walk into a Godrej Properties launch and you will see a familiar playbook at work.
The company rarely buys every piece of land it builds on. Often, it partners with landowners, sharing either the built-up area or the revenue instead of paying for the land upfront. This keeps its finances light and gives it a shot at prime plots in big cities without locking up huge sums for years.
Management says every deal, whether outright or a partnership, must clear the same hurdles — a healthy project profit and an annual return of over 20 per cent. It is a simple filter, but it explains why the portfolio now covers both city-centre towers and township projects, yet aims for similar economics.
That filter was visible in the first quarter of FY26.
The company added five projects with a combined potential sale value of Rs 11,400 crore. That is already more than half its full-year target for new additions.
In plain terms, Godrej now has more homes lined up to sell, keeping its sales machine well stocked for the coming quarters.
Also, the stars of the quarter were MSR City in Bengaluru, Majesty in Greater Noida, and Tiara in Pune, which together contributed almost half the sales.
But then, if the sales counter is ticking so fast, why did reported revenue dip slightly to Rs 1,593 crore?
The answer lies in the way real estate accounts for income. The numbers you see in the profit and loss statement reflect construction progress and handovers, not just bookings.
In Q1, Godrej delivered 0.8 million square feet against a full-year target of at least 10 million. The rest of those sales will show up in future quarters as projects are built and handed over.
Where the quarter shone was profitability.
Even with flat revenue, EBITDA rose 18 per cent to Rs 915 crore, and net profit jumped 15 per cent to Rs 600 crore, the highest quarterly profit in the company's history. A big part of this came from selling high-demand projects that quickly covered fixed costs, and from some additional income in joint ventures.
Collections from customers rose 22 per cent to Rs 3,670 crore, which matters because it turns sales into cash, keeps debt low, and keeps building sites active.
Prices, too, are holding.
Godrej managed small increases – 2 to 3 per cent in North and South India, 1 to 2 per cent in Mumbai, and little change in Pune. In some projects, the company is holding back the choicest apartments and releasing them in phases to secure higher prices later.
At Golf Course Road, for example, sales after launch grew from Rs 497 crore to Rs 778 crore in six months, while Lakeside Orchard went from Rs 268 crore at launch to Rs 1,370 crore over time.
The next big test is execution.
The company has been overhauling its construction setup — tracking labour through digital tools, bringing in larger contractors, and buying materials like lifts, tiles, and paints in bulk. In Q1, it spent about Rs 1,170 crore on construction, up from Rs 750 crore a year ago. The idea is simple: the faster the sites move, the sooner sales become revenue and profit.
Margins will not always look as strong as they did this quarter.
The mix of projects matters, as does Godrej's share in each. Sales from joint ventures where it owns a smaller stake will feed less profit into its accounts. Approval delays or slower build-outs could also shift earnings to later periods. And with rivals launching heavily in the same markets, holding on to price will depend less on the Godrej name and more on how well, and how quickly, the company delivers.
For now, the numbers show a healthy business.
The stock, however, has been stuck in a range because the market wants to see the same story play out quarter after quarter — strong sales, fast construction, and consistent profits. If Godrej can keep that rhythm, it will have a much stronger case for breaking free from that range.
Valuation: what is priced in, what is left, and what it hinges on
Godrej Properties' stock does not trade like a typical real estate company.
On many metrics, it is valued more like a high-growth consumer brand. The market is willing to pay a premium because of three things: the power of the Godrej name, its ability to sell across multiple cities, and a land bank that can keep the launch pipeline full for years. That premium is visible in the numbers.
By most analyst estimates, the stock trades at par with the sector average on earnings and enterprise value multiples.
The upside case is easy to imagine. If Godrej can convert its Rs 40,000 crore-plus launch pipeline into steady sales, keep collections strong, and speed up deliveries so that profits rise in step with bookings, earnings could grow at a healthy clip for several years.
That would make today's valuation look more reasonable over time. The balance sheet is in good shape, debt is low, and the brand gives it pricing power in many markets. In a softer demand environment, that combination can still win share from weaker developers.
The downside comes from the same place as the promise.
With the stock already pricing in a long runway of growth, there is little margin for error. Any slowdown in sales momentum, slippage in deliveries, or squeeze on margins could quickly change investor sentiment.
Competition is intense, with other large developers also launching aggressively in key micro markets. If prices stagnate and absorption rates slow, the market could start to question whether the premium is still justified. Approval delays, especially in large city projects, and a need for higher construction spending could also weigh on near-term cash flows.
For now, the share price is telling its own story. It has been locked in a range because investors are waiting for proof that the high bookings of recent quarters will flow through into equally strong earnings, quarter after quarter.
The next leg up hinges on execution – getting projects built and handed over at the pace the pipeline promises, without letting margins slip. If that happens, the stock has room to move.
Note: This article relies on data from annual and industry reports. We have used our assumptions for forecasting.
Parth Parikh has over a decade of experience in finance and research and currently heads the growth and content vertical at Finsire. He holds an FRM Charter and an MBA in Finance from Narsee Monjee Institute of Management Studies.
Disclosure: The writer and his dependents do not hold the stocks discussed in this article.
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