Godrej Properties Fixes its IPO Price Band at Rs 490-530 Per Equity Share

Godrej Properties Ltd (GPL), a realty firm promoted by Godrej Industries Ltd and Godrej & Boyce Manufacturing Company Ltd, will enter the capital market with its proposed initial public offer (IPO) on December 9. The offer will close on December 11. GPL has fixed the price band between Rs 490 and Rs 530 per equity share for the IPO of equity shares of Rs 10 each. This is for cash at a price to be decided through a 100% book-building process and aggregating up to Rs 499.8 crore at the higher band.

Addressing a media conference, Godrej Group chairman Adi Godrej said, “GPL, having real estate presence in 10 cities in India, has a compounded annual growth rate (CAGR) of 56% and profit after tax (PAT) at 90% per annum over the past five years. We are not a land owning company, but provide land to developers by entering into joint venture (JV) development with them on the basis of outright prices. Of the 82.7 mn sq ft land bank, Godrej Group holds 2.8 mn sq ft. We have completed 23 real estate projects and 5 mn sq ft for JV projects.”

GPL executive director Pirojsha Godrej said the firm aims to utilise Rs 203 crore for acquiring land for its forthcoming projects and Rs 172 crore for repayment of debts. The company’s debt-to-equity ratio is 2:1. Besides, Rs 75 crore would be used for construction of the realty firm’s forthcoming projects in the next three years. Shares of the firm are proposed to be listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). Last year, GPL had planned to come out with the IPO, but shelved it due to volatile market conditions in wake of the global slowdown.

Currently, GPL’s shareholding pattern includes 1% by employees, 80% by Godrej Industries, 15% by Godrej family and 3-4% by the Godrej Group. Pirojsha said after the issue, the shareholding by Godrej Industries will reduce from 80% to 70%. Gautam Vohra, capital markets, Jones Lang LaSalle Meghraj, said, “If the price band of Godrej Properties is fixed at a premium to net asset value (NAV), then ideally it should be at a discount of NAV. All real estate companies are trading at a discount of NAV. Hence, there is no reason as to why Godrej Properties price band should be at a premium to NAV.”

As part of its real estate expansion plans, GPL is planning to develop a mixed-used development project in Ahmedabad, which will include residential and commercial properties, a hotel and a hospital spread across 330 acres. Godrej said, “With disposable incomes rising, demand growth being witnessed in the residential realty market and Ahmedabad city is expected to witness additional 40% population growth. We feel it is the right time to infuse maximum investments in this city. Since we have entered into an MoU for construction with Larsen & Toubro (L&T), we feel we will be able to complete our real estate projects on time as L&T are contractors for all our real estate projects.”

News Published Under:   Real Estate India |

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