India's Godrej Properties falls as brokerages flag risks from D B Realty investment

Valor Estate

04/02/2022 07:16

** Shares of Indian real estate co  GODR.NS  fall as much as
10% to 1,501.10 rupees, post their biggest intraday pct drop
since March 30, 2020
    ** Several brokerages raise doubts over GODR's proposed
investment in real estate development and construction company D
B Realty Ltd  DBRL.NS 
    ** GODR on Thursday said it would subscribe to DBRL
warrants, which would be convertible into a 10% stake, for 4 bln
rupees ($53.53 mln)  urn:newsml:reuters.com:*:nFWN2UE0SV urn:newsml:reuters.com:*:nFWN2UE0SW
    ** The two companies will also contribute an additional 3
bln rupees each for redevelopment projects in Mumbai
    ** DBRL shares rise as much as 5% to hit an upper circuit at
100.15 rupees
    ** "Slum rehab projects can be lucrative, but there is a
limited track record of large-scale success. Moreover, DB's own
track record is weak, including debt defaults, which raises
risks for (GODR's) investment" - Jefferies
    ** "We are not enthused by the proposed entity level
investment in (DBRL) by (GODR) and believe that this exposes
(GODR's) shareholders to entity level risks in (DBRL) and
greenfield slum rehab projects in Mumbai, which are fraught with
risks" - ICICI Securities        
    ** GODR earlier on Thursday had said Dec-qtr consolidated
net profit more than doubled to 389.5 mln rupees, while rev from
ops rose 63.5% to 2.79 bln rupees  urn:newsml:reuters.com:*:nFWN2UE0BL   
    ** In 2021, GODR stock rose 30.7% while DBRL stock more than
tripled in value 
($1 = 74.7200 Indian rupees)

 (Reporting by Anuron Kumar Mitra in Bengaluru)
 ((AnuronKumar.Mitra@thomsonreuters.com; +91 99863 58469;))