Here's why Godrej Properties shares tanked 10% today

Shares of Godrej Properties Limited tanked over 10 per cent to hit an intraday low of Rs 1502.35 on BSE. The stock has been falling for the last 2 trading sessions.
 
The stock opened 9.4 per cent lower at Rs 1,511 against the previous close of Rs 1,669.25. With a market capitalisation of Rs 42,281 crore, the shares stand lower than 5 day, 20 day, 50 day, 100 day and 200 day moving averages.
 
The company announced that it is planning to invest Rs 400 crore to acquire around 10 per cent stake in real estate firm DB Realty and will also set up a Rs 600 crore equal joint platform to develop slum redevelopment projects.
 
In an interview with PTI, Godrej Properties Executive Chairman Pirojsha Godrej said that the company’s board has approved investments in DB Realty.
 
"We will be investing about Rs 400 crore in DB Realty for around 10 per cent stake through the issue of warrants,” Pirojsha said.
 
Godrej Properties will subscribe to warrants convertible into equity shares. Stating that DB Realty has a strong capability of executing slum redevelopment projects, he said the company would enter into this new segment that has huge opportunities.
 
"Godrej Properties was down by more than 14 per cent in the last two sessions, on the back of disappointment on Q3FY22 numbers and investment in D B Realty," said Mr. Yash Gupta, Equity Research Analyst, Angel One Ltd.
 
"The market doesn't like this investment decision of Godrej properties Limited, as there are several issues with DB realty. Earlier in January 2022, DB Realty had made a default on the payment of Rs 698 crores. We expect some more clarity from Godrej Properties in the coming month, till the time we suggest retail investors hold their investment in Godrej Properties and not make any fresh investment at this level," he added.
 
According to a regulatory filing, the board granted its approval to evaluate a potential investment in DB Realty Ltd in the form of warrants convertible into equity shares and the setting up of a special purpose vehicle as a joint venture with DB Realty to undertake slum rehabilitation and MHADA (Maharashtra Housing and Area Development Authority) redevelopment projects.
 
Godrej Properties reported an increase of 171 per cent in its consolidated net profit to Rs 38.95 crore for the third quarter ended December 2021. Profit in the year-ago period stood at Rs 14.35 crore.
 
Revenue from operations jumped 63.5 per cent to Rs 244 crore, compared with Rs 72.8 crore in the year-ago period.

(With inputs from PTI)