The credit rating agency has upgraded the rating on the long-term - fund-based/non-fund-based instrument and the non-convertible debenture program of the company to "[ICRA] AA+ (Stable)" from "[ICRA] AA (Positive)".

Simultaneously, it has reaffirmed the rating on the short-term - fund-based/non-fund-based instrument and the commercial paper of GPL at "[ICRA] A1+".

ICRA said that the upgrade in the long-term rating of Godrej Properties (GPL) considers the sustained improvement in its profitability metrics, driven by favourable and diverse mix of project development models and robust growth in cash flows on the back of scale-up in operations. The improvement in profitability is expected to sustain going forward, supported by the healthy pipeline of projects to be delivered over the near to medium term.

The increasing share of interest and service income from joint venture (JV) entities as well as the recent increase in price realisations will also support the profitability. The company has been steadily building pipeline, aided by capital raised during FY2019-FY2021, which provides medium-to-long-term revenue visibility.

The ratings continue to draw strength from GPL's strong market position and the robust bookings and collections reported for five consecutive quarters starting Q4 FY2021, supported by new launches.

The ratings factor in the comfortable capital structure and the strong liquidity position. The consolidated net debt (excluding qualified institutional placement (QIP) monies) stands at Rs 3,844 crore as on March 31, 2022. The ratings note GPL's strong parentage by virtue of being a part of the Godrej Group with exceptional financial flexibility and access to the land holdings of the Group entities.

The ratings are, however, constrained by the cyclical nature of the real estate industry and exposure to execution and market risks arising from its large expansion plans. Nevertheless, ICRA expects GPL to benefit from its strong brand and the favourable demand environment in the residential real estate market.

The Stable outlook on the [ICRA]AA+ rating reflects ICRA's opinion that GPL will continue to benefit from its established brand as well as a track record of operations, and maintain healthy sales and collections.

Godrej Properties (GPL) is the real estate venture of the Godrej Group. GPL is present in 10 cities in India and focuses mostly on residential real estate development. It has delivered approximately 24 million square feet (msf) of real estate over the last five years and has around 192 msf of total developable area across 85 projects as on 30 April 2022.

The scrip advanced 3.33% to end at Rs 1507.75 on the BSE on Friday.