For Godrej Properties Ltd, softer collections played spoilsport in the three months ended September (Q2FY26), overshadowing robust pre-sales, which were above ₹7,000 crore for the third consecutive quarter. Unsurprisingly, the stock has declined by 5% over the last two trading sessions.
Pre-sales or bookings rose year-on-year and sequentially in Q2 to ₹8,505 crore, driven by new launches including Godrej Regal Pavilion in Hyderabad, Godrej Skyshore in Mumbai, and Godrej Tiara in Bengaluru.
H1FY26 pre-sales rose year-on-year to ₹15,587 crore or about 48% of FY26 pre-sales target. This is the highest ever Q2 and H1 booking value achieved by Godrej Properties.
In comparison, collections rose a mere 2% year-on-year in Q2FY26 to ₹4,066 crore and 10% in H1FY26 to ₹7,736 crore. So far, Godrej Properties has achieved 36% of the FY26 collections guidance. Thus, it has a lot of ground to cover in collections.
In real estate, collections are linked to residential projects, achieving delivery milestones. So, the management is hopeful of an improvement in H2FY26 as deliveries of residential units are expected to rise in Q4. It has delivered around 3 million square feet (msf) in H1FY26 and aims for 10 msf in the entire financial year.
Godrej Properties has maintained its FY26 pre-sales guidance of ₹32,500 crore, up 10% year-on-year. True, this target seems conservative given its launch pipeline of over ₹40,000 crore.
Upcoming launches in the remainder of the year are spread across Worli in Mumbai, Panvel, the National Capital Region, Indore, Chennai, and Bengaluru. So, timely project approvals are crucial to meet the pre-sales goal.
However, there are lingering concerns that residential demand momentum may take a breather in the key markets of Mumbai and Bengaluru. According to Antique Stock Broking, Godrej Properties delivered 55% compound annual growth rate (CAGR) in pre-sales over FY222-FY25, and it does not expect the same euphoric momentum to sustain given the high base of FY25.
Godrej Properties is targeting 20% pre-sales CAGR over the medium term. From the current market share of around 4%, it intends to increase it to 5-6% going ahead as it forays into tier-2 markets.
On the business development front, Godrej Properties has added nine new projects in H1FY26 with revenue potential of ₹16,300 crore or 81% of FY26 guidance. However, increased investments in new land acquisitions and approvals, mainly funded through debt, pushed net debt higher.
Net debt-to-equity at 0.3x in Q2FY26 versus 0.26x in Q1FY26. In this backdrop, improving cash flow performance is vital to keeping debt in check. Operating cash flow in H1FY26 declined 24% year-on-year to ₹2,137 crore.
The stock’s performance has been unimpressive, dropping 22% so far in 2025 versus 11% decline in the Nifty Realty index. “While Godrej Properties has sustained gross margin at a healthy level of 35-40% for recognized projects in P&L, the higher scale of operations has led to a proportionately steeper increase in overhead, leading to subdued operating profits,” said a Motilal Oswal Financial Services report dated 6 November.
The broking firm expects sales booked over the past two years, characterized by a better margin profile, to be recognized after FY26/FY27, which could allay investor concerns.
Real estate companies recognize revenue from a project in the financial statements when a unit is handed over to the customer.
