Godrej Properties has expanded its land bank with the acquisition of a 90-acre plot in Khalapur, Maharashtra. The company plans to develop approximately 1.7 million square feet of residential plotted development on this land.
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Hi,
does anyone here understands how cash collection doesnt relate with Revenue in P&L statements of real estate companies?
For example, as stated cash collections here in the Q1 FY25 investor presentation, it stands at 11436 Crores:
So, my mind makes sense that Revenue for the period has to be more or equal to 11436 Crores as this is the money coming in. But strangely, revenue is as follows: 3036 Crores (taken from screener.in)
Revenue is like 1/3rd of cash collections. And even lesser to bookings. So what parameter actually adds up to the top line in a company like this?
If anyone understands the industry/accounting wizardry here, do enlighten please!
This would help in understanding what variable to exactly track. As right now, if we track cash collections, guidance seems to be 31% growth. But if that doesnt relate to same growth in topline/bottom line, then its wrong variable being tracked.
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Real estate cos in India follow contract completion method where revenue gets recognised when the project is completed and handed over. Earlier it used to be % completion method but they changed the accounting. Therefore, reported topline is historical and an academic figure.
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Thank you for this insight 
@bheeshma . So what variable, according to you, is best to track? Cash Collections, Booking value, or something else?
Just want to know a variable that I can track that gives me confidence that topline will eventually be grown to same degree as this variable. As guidance seems to be lacking over revenue or PAT, but seems abundantly and transparently displayed on above stated variables.
If you are looking at financial statements then operating cash flow less interest is the most reliable number to assess the health of the co as good cos generate good cash flows. For reasons not very clear to me interest expense is part of cash flow from financing even though it’s a part of business operations so you will have to take that out from there and deduct it from CFO.
Book value is also a good proxy but some of the figures on the balance sheet are hard to understand so the simpler way is to rely on cash flows
Pre Sales number and average realisation in Rs per sqft that is disclosed in investor presentations is what everyone tracks and gives a good sense of what’s happening in the co
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Thank you @bheeshma for the insight. I’ll follow the guidance.
I’ll be tracking these numbers going forward. I have put up following in my notes.
Once again, Thank you for patiently answering my queries and helping out!
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I see below management Risk with GPL Need to investigate few :
- Defence Ministry Red Flag: The Ministry of Defence has raised objections to GPL’s ongoing residential project in Kandivali, Mumbai. The project is located near the Central Ordinance Depot, and the Defence Ministry has asked GPL to suspend the project1. This has led to a decline in GPL’s share price.
- Money Laundering Allegations: The Enforcement Directorate (ED) has intensified its investigation into alleged money laundering related to a housing project. Several key individuals from GPL, including directors and officers, have been summoned for questioning2.
- Ongoing Legal Dispute: GPL is involved in a legal dispute with Orris Infrastructure over a payment of Rs 202 crore for land. The Economic Offences Wing (EOW) of Delhi Police has registered an FIR against GPL and its top executives
Links below :
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Thanks for bringing this to attention.
Discl. : Invested. Small Position.
