The Godrej group has increased its stake in Bengaluru-based property developer Sobha to about 10 per cent in the June quarter of this financial year, from one per cent in the March quarter of FY20.
Anamudi Real Estates, part of the Godrej family, bought Sobha’s shares worth Rs 29.3 crore in three tranches in June quarter, data filed with exchanges showed.
While emails seeking comments from Godrej group did not elicit any response, real estate analysts said it could be no more than a portfolio investment by the Godrej group.
“They have bought it from the market, not from us. We are not in any talks with them. They must have liked the company. Otherwise, we don’t have any plans to sell any stake,” said a senior executive from Sobha.
Godrej group’s real estate company, Godrej Properties, has already indicated that it will look to increase its market share and add new projects despite the challenges posed by Covid-19.
“The most important opportunity will be to gain market share. Our strong business development over the past few years has ensured that our launch pipeline is the best it has ever been. We will be agile and ready to launch these projects and thereby gain share while most of our peers are focused on liquidating their current inventory,” said Pirojsha Godrej, chairman of Godrej Properties in the latest annual report.
“Despite these headwinds, we believe we are well placed to maintain our growth momentum in the current financial year... We are prepared to withstand a possible downturn in the sector -- however bad it gets,” said Pirojsha.
However, some analysts such as A K Prabhakar, head of research at IDBI Capital Markets, said that both companies can use their synergies in South India.
“Sobha is one of the biggest developers in the South and a major contractor for many commercial buildings. Godrej can bring in the land parcels and Sobha’s construction capabilities,” Prabhakar said.
From a stock performance, Sobha’s stock has declined 41 per cent since the beginning of the calendar year while Godrej Properties stock has fallen 10 per cent.
The Covid-19 issue has hit Indian real estate badly. Residential sales fell 67 per cent in the June quarter of this calendar year and launches have fallen 81 per cent during the same period, according to real estate analytics firm PropEquity.
“These are unprecedented times for the world economy and India is one of the hardest hit due to the epidemic. The real estate sector which was slowly reviving in March was hit by a complete halt in construction and sales in the last week of March. We believe larger developers with low debt leverage will ride the storm and do reasonably well by Q3 onwards within the context of the new normal," said Samir Jasuja, founder and managing director, PropEquity.