Shares of Godrej Properties Ltd. hit the 10% lower circuit as analysts cut price targets for the real estate developer citing its deal with DB Realty Ltd. as “unwarranted” and “surprising”.

Godrej Properties’ board approved a potential investment in DB Realty and setting up of a special purpose vehicle to jointly undertake slum rehabilitation and Maharashtra Housing and Area Development Authority redevelopment projects, according to an exchange filing dated Feb. 3.

“Godrej Properties will subscribe to warrants convertible into equity shares aggregating to about 10% of the issued and paid-up capital of DB Realty for an aggregate amount of Rs 400 crore,” the filing said. They will each contribute an additional Rs 300 crore towards the equity platform focused on redevelopment opportunities in Mumbai.

Meanwhile, the Mumbai-based developer announced its third-quarter results, with net profit jumping more than twofold at Rs 38.9 crore.

Other Q3 Highlights (Consolidated, YoY)

  • Revenue up 64% at Rs 279 crore.

  • Total costs up 20% at Rs 331 crore.

  • Sales booking at Rs 1,541 crore, up 4%.

  • Pre-sales volumes fell 7%.

Shares of Godrej Properties slumped the most in 15 months around 9:30 a.m., after ending 6.4% lower a day before. Of the 20 analysts tracking the company, two recommend a ‘buy’, six suggest a ‘hold’ and 12 have a ‘sell’ call, according to Bloomberg data. The average of 12-month price targets still implies a 5.9% upside.


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