Prestige Estates Projects beats its own sales guidance

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Prestige Estates Projects beats its own sales guidance

Prestige Estates Projects achieved record sales and the highest-ever collections in FY23, with about 60 per cent of sales coming from Bengaluru, followed by Mumbai 21 per cent and Hyderabad 14 per cent bookings of Rs 12,900 crore, surpassed Prestige's own guidance of Rs 12,000 crore for the year. The affordable segment accounted for most of the sales, analysts said, given its strong pre-sales performance and attractive launch pipeline.

Investors were enthusiastic about the company's initiative to foray into non-Siri markets and have price targets of 540 and 675 on the stock, suggesting a potential 11 - 38 percent upside.

Prestige Estates Projects is aiming for 25 percent growth in pre-sales in FY24. In FY24, Prestige Estates Projects plans to launch the next phase in Mumbai, including Prestige City Mulund, Prestige Ocean Towers and Prestige Nautilus. The company is planning to launch Prestige City and Prestige Rock Cliff in Hyderabad. Pallava Gardens will also be launched in Chennai, which should start contributing this fiscality, Elara Securities said.

Motilal Oswal Securities has a target of 675 rupees. Elara pegs Prestige at 606. Jefferies, a foreign trader in India, found the stock worth Rs 560.

It has guided for Rs 15,000 crore of pre-sales in FY24, up 21 per cent in the past six months.

The 25 per cent pre-sales jump in FY23 was driven solely by new geographies of Mumbai and Hyderabad, as Bangalore sales fell. Strong launch pipeline expansion in new locations could boost the same 25 percent growth in FY24. Stake purchase in Mumbai commercial properties adds to the large investments in lease assets in Mumbai, with a monetisation likely only when execution gains visibility, Jefferies said, while maintaining a revised target price of Rs 560 from Rs 550 earlier.

Jefferies said the jump in pre-sales should start reflecting in much higher profitability, but likely from FY 26.

Prestige Estates recently signed an agreement with DB Realty to take over the remaining 50 percent share of the company at BKC 101 X and the Prestige Liberty towers, Mahalaxmi. The transaction has been valued by the company based on a rent of Rs 300 per sqft and a cap rate of 9.5 per cent. The firm expects to generate a rental of 350 per sqft.

The company will now own a 100 per cent stake in both of the assets and will lead to Rs 1,000 crore of additional rental income, Motilal Oswal said.

Prestige Estates plans to bear the total cost of Rs 7,000 crore, Rs 4,200 crore, of construction, Rs 1,800 crore, of premium, Rs 350 crore, and Rs 300 crore, of NOC, of which Rs 3,000 is already paid out. With the majority of the consideration already paid out, we do not expect any significant increase in net debt, as a result of this transaction, it said in 1 QFY 24.

While the recent acquisition of key office assets in Mumbai has resulted in an increase in net debt, Motilal said the increased cash flows would support the company in meeting its business development spending and commercial capex requirements without putting pressure on the balance sheet.