Godrej Prop tumbles down

Godrej Properties Ltd (GPL) got a thumbs down from the market as it apparently did not approve the decision of its Board to invest Rs.400 crore in DB Realty (DBR), to acquire around 10 per cent stake through the issue of warrants.

The Board also approved setting up of a special purpose vehicle along with DBR to jointly undertake slum rehabilitation and MHADA redevelopment projects. This will cost another Rs.300 crore. The total size of the joint platform of Godrej Properties and DB Realty will be Rs 600 crore, with each party contributing Rs 300 crore. The first tranche of the investment will be made in the current quarter.  This will be under a 50:50 equity partnership with 10 per cent development management fees to GPL. 

The market was as such disenchanted with its Q3FY22 earnings and this deal now sours the taste as slum rehabilitation projects are always problematic and get stuck for years to get required approvals.

Prior to this, GPL had announced that its sales bookings in Q3FY22 were down 40% (QoQ) at Rs.1540 crore on account of delay in launch of projects.

These two developments, especially the slum rehabilitation, have led to many brokerage houses giving a sell call on the stock.

The stock opened 9.5% lower at Rs.1511 and went down further to Rs.1502, going down over 10%. Its 15% LC for the day is at Rs.1418.90.