Can surpass Rs 5000cr FY15 sales guidance: Prestige Estates

Below is the verbatim transcript of Irfan Razack’s interview with Latha Venkatesh & Sonia Shenoy on CNBC-TV18.

Sonia: Can you just tell us a little bit about Q4 and Q1 of next year will look like? How many projects are expected to come in for revenue recognition and what could the revenue trajectory be?

A: This quarter itself we have done revenue of Rs 645 crore and I believe that in the next two quarters there are several other projects that will come in for revenue recognition like Prestige Westwood and Prestige Augusta Golf Village and this is going to kick up the over all revenue. This is also going to help the bottom line.

Latha: We understand there was not that many of revenue recognition projects in Q3. It would obviously be a little more in Q4 the current quarter and the next. So should we prepare for the something better than a 40 percent rise in revenues?

A: Right now if you compare Q3 quarter of 2013-2014 and Q3 quarter of 2014-2015 there is a big jump. I believe that if you compare quarter-on-quarter (QoQ) for the next quarter there is going to be a big leap.

Latha: Money is getting a little easier whether you are borrowing from a wholesale market or whether you are borrowing from an informal market or even for that matter from the banks through instruments. Would you think that average realisations will therefore go up in the current and next quarter?

A: Average realisations if you look at it even now are around Rs 6,500, it is quite decent and I believe that, that’s the way to go and they will just firm up; that is what it is. As far as the borrowing is concerned I believe that the interest rates now the signal is very clear it is not a big thing that has happened but the things are going to go southwards which is going to help us on the over all costing. Currently our weighted average cost of capital (WACC) is about 12.51 percent and that is likely to go down by at least a percentage point as things ease off.

Sonia: You did mention that Prestige Westwood and Prestige Augusta Golf Village will come in for revenue recognition next quarter or in the next couple of quarters. Can you tell us what is the fresh launch pipeline looking like? What are the new projects that Prestige will launch in the next two to three quarters?

A: We have a very strong launch pipeline now starting from this quarter itself. I am happy to inform you that both our large projects in Hyderabad as just been approved. Those will get launched in sometime in the middle of February or end of February. That will bring in a lot of revenue in the terms of sales for the initial quarter. In Bangalore also there are several projects which are under approval. We are going to do something like 6 projects though they are not very large size projects but they are medium size projects. That is also going to add on to the sales revenue that we get along with the current stock inventory that is on going.

Sonia: I am sure through these projects meet your FY15 sales guidance of Rs 5,000 crore but how much it could exceed your guidance? So by the end of FY15 how much sales could you do?

A: Currently we are at Rs 4,000 crore almost and our guidance is Rs 5,000. I believe that we could easily surpass that guidance but I do not want to sound either too optimistic or very over confident. Once let this quarter pan out and then it will be something for us to again feel happy about and celebrate that we have actually done better than what we had promised will do.

Latha: Is there a scope to improve operating margins even more? Secondly on a more general note is demand picking up or is it that just you are doing well?

A: We don’t feel any difference in the demand but honestly speaking the last two quarters the type and quality of customers and the high price properties being selling so that means demand picking up even from the business sector not only from the mid income group. So I believe that things are looking better and better and it all depends on what type of Budget we are delivered in the end of February. That is going to spur up the overall demand once more and everybody is positive that it is going to be good so hope we believe that demand will continue to go unabated.

Sonia: Do you expect higher margins in FY16 much above this 31 percent that you have clocked in this quarter?

A: We have an EBITDA of around 35 percent this quarter. We probably will stick to that because moment I increase my margins it will also slow down the revenues. So I believe the bet is to control your greed and keep your need intact and see that we clock in this 35 -36 percent EBITDA margins. We focus we also have our eye on our overheads and we want to keep that also under control so that we get a good decent profit after tax (PAT).