Friday, December 4, 2009

Godrej Properties IPO - Analysis, Recommendation and Review

Godrej Properties is coming out with an IPO of 9,429,750 equity shares of Rs 10 each. The issue will open for subscription during on December 9 and will close on December 11, 2009. The issue will constitute 13.5% of the post issue paid-up capital of the company. Godrej Industries, the parent company, currently holds 80.26% of equity share capital in the company.
The company is in the business of real estate development in India. It currently has real estate development projects in 10 cities in India, which are at various stages of development. The proceeds of the issue will be used for acquisition of land development rights for forthcoming projects; construction of forthcoming project and repayment of loans.

The equity shares are proposed to be listed on the BSE and NSE. For the year ended March 31, 2009, the company reported profit after tax of Rs 74.74 crore on total income of Rs 188.13 crore. As on June 30, 2009, it has debt of Rs 745.78 crore on its books.

Global Co-ordinators and book running lead managers to the issue are ICICI Securities Limited, Kotak Mahindra Capital Company Limited, IDFC – SSKI Limited and Nomura Financial Advisory And Securities (India) Private Limited. Karvy Computershare Private Limited is the registrar.

We would not recommend investors to invest in this IPO. Watch out this blog for details on subscription, allotment and listing!

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  1. hello,

    thankyou for your post. Can you please your logic / reasoning behind Not recommending an investment in GOdrej Properties ipo?

    Thanks and regards,

  2. Thanks Abit for your comment. Godrej is a recent entrant in property business which is dominated by many players which are established for several decades. We won't go into quantitative assessment of the IPO but from a quality perspective we believe it is a risky IPO given the company is establishing itself in the property business. The IPO is also not cheap given that it is priced at a range of Rs. 490 - Rs.530. Given that IPOs are back in full steam, the investors may make some money. But we still believe it is a risky one for investors. We did rather recommend that shares can be bought in the secondary market after listing and seeing the company perform after a couple of quarters. There are many property shares like Unitech, DLF that can be looked at if one is interested in this area.

  3. High Price. Don't Invest by Brand "Godrej". Check customer satisfaction & profit earning capability. I'm the customer and suffering by buying "Woodsman Estate" property of Godrej in Bangalore, which is making loss. But half of the flats are empty and not finished. very poor quality & poor customer care.