The agency has also reaffirmed the company’s short-term rating at '[ICRA] A1+’.

ICRA said that the ratings reaffirmation for Godrej Properties Limited (GPL) factors in the strong operating performance in 9MFY2024asreflected by healthy growth in sales, collections and cash flow from operations (CFO).

The same is expected to sustain in Q4 FY2024 and FY2025, driven by robust project launch pipeline, likely healthy sales velocity in the upcoming launches, backed by continued end-user demand.

The ratings continue to draw strength from GPL’s robust market position, strong parentage by virtue of being a part of the Godrej Group with exceptional financial flexibility and access to the land holdings of the Group entities.

ICRA notes that the company’s consolidated gross debt is estimated to increase to approximately Rs 11,000 crore by March 2024 from Rs 6,412 crore as of March 2023 due to the expected land/approval-related investments of around Rs. 6,700 crore in FY2024 (Rs. 4,214 crore in 9M FY2024).

With rise in debt levels, GPL’s leverage measured by net debt/CFO is likely to increase to2.8 –2.9 times as of March 20243from1.8 times as of March 2023.

However, with expected improvement in cash flow from operations in FY2025, supported by adequate committed sales and a healthy launch pipeline of upcoming projects, ICRA expects the Net Debt/CFO to reduce to below to 2.40 times as of March 2025. The company has free cash and liquid investments of Rs 2,837 crore as of December 2023.

A major portion of the same is earmarked for growth/investments. Nonetheless, its liquidity position would continue to be strong even after the deployment of these earmarked funds.

The ratings are, however, constrained by the cyclical nature of the real estate industry and exposure to execution and market risks arising from its growth plans.

Godrej Properties is the real estate arm of the Godrej Group. It is subsidiary of Godrej Industries, which holds 58.48% of the company's equity shares as on 31 December 2023. The company currently operates in various cities and focuses on residential, commercial, and township development.

The real estate developer’s consolidated net profit increased 6% to Rs 62.27 crore in Q3 FY24 from Rs 58.74 crore posted in Q3 FY23. Revenue from operations jumped 68.39% to Rs 330.44 crore in Q3 FY24 from Rs 196.23 crore recorded in the corresponding quarter previous year.

The scrip shed 0.74% to currently trade at Rs 2286.25 on the BSE.