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Godrej Properties share price surged 2% after the company opened its Rs 6,000 crore Qualified Institutional Placement (QIP). The floor price for the QIP has been fixed at Rs 2,727.44 per share, with a discount of 5% to the indicative price of Rs 2,595. The company will sell up to 5.5% of its equity, of around 1.54 crore real estate shares.
Godrej Properties finds itself in a precarious debt situation as it goes through the process of a QIP. By June 2024, the net debt at the company stood at Rs 7,432 crore, up from Rs 6,198 crore in the previous quarter and Rs 5,298 crore from the same time last year. Debt reduction and funding for future growth were the objectives behind the Godrej Properties QIP issue.
Godrej Properties shares surged to an intra-day high of Rs 2,903 on the National Stock Exchange (NSE) after the QIP announcement. The stock, however, ended the day 2.4% lower at Rs 2,831. Despite this decline, the stock has seen a 6% increase this week, which suggests that optimistic investors' outlook. Godrej Properties stock has also gained 2% overall since the announcement.
The QIP was approved by Godrej Properties' board and shareholders with a special resolution passed in October 2024. Such an issue will enable the company to raise equity funds through either the sale of equity shares or fully convertible debentures, partly convertible debentures, non-convertible debentures, preference shares, or even other eligible securities. More importantly, the company can offer a discount of up to 5% on the floor price.
The outcome of this fundraising initiative will be keenly watched by market analysts. Godrej Properties QIP is being viewed as a strategic step in making the company financially sound. However, Its success will also depend on investors’ interest and the company’s ability to manage its debt efficiently.
QIP is an important step for Godrej Properties in its plan to enhance liquidity and reduce leverage as it navigates a challenging market environment.
