Godrej Properties’ rerating hinges on sales growth

Godrej Properties concluded FY26 with impressive record bookings and presales, significantly exceeding its annual guidance, yet faces scrutiny from brokerages regarding its cash-flow generation and long-term growth sustainability in a cautious real estate market.

Photograph: Courtesy, Godrej Properties

Godrej Properties closed 2025-26 (FY26) on a strong note, beating its annual presales and bookings guidance.

The developer reported record bookings, collections and business development, exceeding most targets while falling marginally short on its collections goal.

The stock gained 1.6 per cent on Friday after reporting its fourth quarter (Q4) numbers but slipped on Monday.

Brokerage Concerns and Market Sentiment

While brokerages are positive about the company’s sales, they are concerned about its ability to sustain growth amid weak cash-flow generation and muted sentiment in the real estate market.

Godrej’s Q4 bookings stood at Rs 10,160 crore, which was flat year-on-year (Y-o-Y) but up 21 per cent sequentially. The pan-India company sold 4,791 units — an area of 7.3 million square feet — to mark its best-ever quarterly performance.

It delivered a strong show in FY26 on the back of record bookings, collections and business development. Presales grew 16 per cent Y-o-Y to Rs 34,170 crore, helping the company to beat its guidance by 5 per cent on the back of robust demand and strong launches. Collections rose 17 per cent Y-o-Y to Rs 20,000 crore, but fell short of guidance by 5 per cent. JM Financial Research analysts led by Sumit Kumar noted that though collections fell short, operational cash flow increased 5 per cent Y-o-Y to Rs 7,830 crore amid a sharp rise in construction spend.

FY26 Achievements and Future Outlook

Godrej delivered 12.1 million square feet of real estate in FY26, exceeding its guidance by 21 per cent and recorded its best business development year, when it clocked project additions worth Rs 42,100 crore.

The brokerage has a “buy” rating on the company. Nomura Research said Godrej had a strong FY26, with presales and collections growing 16 per cent and 17 per cent.

Akash Gupta, an analyst with the brokerage, expects Godrej Properties to grow presales in FY27 despite the high base, driven by strong FY26 business development and a quick turnaround time.

Nomura has a “neutral” rating on the stock with a target price of Rs 1,920.

A clutch of other brokerages are cautious about the real estate sector and the company.

Godrej’s sales are strong but weak volumes in the overall housing space have led to concerns about growth, said Nuvama Research.

Parvez Qazi and Vasudev Ganatra, analysts at Nuvama Research, said Godrej’s cash-flow generation is weak and needs to improve for a stock rerating.

The brokerage has maintained a “hold” rating with an unchanged target price of Rs 1,925.

HDFC Securities has cut the target price of listed real estate developers by 15-20 per cent to factor in slowing velocity, longer deal closure timelines and further compression in net asset value premium.

With correction in stock prices, the worst seems to be priced in as the current slowdown is more sentiment-driven rather than demand destruction, it said.

HDFC Securities analysts led by Parikshit D Kandpal estimate that the sector will slow down for three to six months and new sales will pick up early Q3FY27 during the festival season.

It has upgraded Godrej Properties to a “buy”, citing the stock correction.