Godrej Properties Stock Has Fallen 38% in Last 3-Months, Should You Buy?

Markets have been exceedingly volatile over the last few trading sessions. The shares of Godrej last week came in for pounding after reports that the board had approved investment in DB Realty. The shares fell sharply on Friday by 10% as investors did not like the deal.

What is the Godrej Properties deal all about?

The Board of Godrej Properties Ltd have approved a potential investment in DB Realty Limited and also the setting up of a special purpose vehicle along with DB Realty to jointly undertake slum rehabilitation and MHADA redevelopment projects.

Godrej Properties will subscribe to warrants convertible into Equity Shares aggregating to approximately 10% of the issued and paid-up capital of DB Realty for an aggregate amount of approximately Rs 400 crore. Godrej Properties and DB Realty will each contribute an additional 300 crore towards the equity platform focused on redevelopment opportunities in Mumbai.

What are analysts saying on buying the stock?

CLSA has maintained a 'sell' rating on the stock of Godrej Properties, and has said it reduces the target price from Rs 1,563 to Rs 1,424, implying a potential downside of 15%. Jefferies has maintained a 'buy' but slashed target price to Rs 2,000 from Rs 2,750 on lower multiples.

Broking firm, Motilal Oswal has maintained a 'neutral' stance on the stock of Godrej Properties, though it has cuts its target price to Rs 1,800 from Rs 2,100 earlier, still implying a potential upside of 8%.

Disclaimer

Investing in equities is risky and investors must therefore understand the risk. The author and Greynium Information Technologies Pvt Ltd would not be responsible for any losses caused based on the article. The author and his family do not hold shares of Godrej Properties. Investors should note that stocks based on new developments can be exceedingly volatile for a few days in trading. It is best to let the share price stabilize before investing.