Expensive? Godrej Properties is valued on par with FMCG firms despite negative cash flow. Here’s why.
Gaurav Pandey, managing director and chief executive officer, Godrej properties; image credit: Company.
Synopsis
From a traditional valuation perspective, shares of Godrej Properties may look expensive. However, given its vast land bank and strong project pipeline, the realty company has the potential to continue outperforming the benchmark indices. Should you buy at current levels?
How do you value a company with negative free cash flows? Well, most analysts and fund managers will not even add such a candidate to their watchlists. But what if the cash flows are being reinvested into the business as the company has a strong conviction on the demand for its products? That makes things a little complex, though it’s a path taken by many new-age giants. In 2019, Netflix, which had been grappling with negative cash flows, took
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