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Godrej Properties shares over 2% after company announces cancellation of DB Realty investment

Godrej Properties Limited’s decision to reverse its decision to invest in DB Realty was well received by investors on Monday as the stock was trading in the green on Monday. The company’s announcement to invest Rs 700 cr in DB Realty did not bode well for Godrej Properties as the stock came under massive selling pressure on Friday after the announcements.

Shares of Godrej Properties rose 2.7% on the NSE Monday at 12:30 p.m. and traded at 1547.45.

The reversal decision came over the weekend and the stock witnessed a positive response from investors on Monday, Kushal Gupta of Zee Business reported. The decision was made in favor of the shareholders, he added.

Gupta said Godrej Properties on Friday announced an investment of Rs 700 cr in DB Realty through various avenues. Of this amount, Rs 400 crore was to be invested by Godrej Properties to purchase a 10% stake in DB Realty.

Apart from this, a JV (Joint Venture) between Godrej Properties and DB Realty was planned for a slum upgrading project, in which the former would have invested Rs 300 crore out of the total investment of Rs 700 crore. The JV was worth Rs 600 cr.

The decision even disappointed many brokerages, including CLSA, which maintained its sell ratings for Godrej Properties but reduced the target from Rs 1,563 to Rs 1,424.

There was no need for Godrej Properties to participate in slum upgrading projects, the brokerage firm had estimated. It was said that the risks of failure or stoppage were high in the slum upgrading project.

Meanwhile, Jefferies Financial Group Inc maintained a long on Godrej Properties, albeit a significant price target revision from Rs 2,750 to Rs 2,000.

They also mentioned that the investment in DB Realty by Godrej Properties would have caused a major downgrade event for Godrej Properties.

While the deal was considerably large, minority shareholders did not like it.

So, after listening to feedback from minority investors and brokerage firms, Godrej Property took the decision to cancel their announcement. Which explains the positive push towards Godrej Properties in the equity market from investors, he said.

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