Prestige Estates’ Q4 results get brokerages’ thumbs up, largely retain buy

Brokerage: CLSA | Rating: Buy | Target: Rs 318

The brokerage said that 52% QoQ improvement in pre-sales and 22% QoQ growth in customer collections show that Prestige has recovered off the demonetisation lows.

“After sales missing targets for two consecutive years, declining 25% YoY in FY17, management has guided for 40%+ growth in FY18. While presales growth may run the risk of new launch revivals, we are much more sanguine on the lease income growth target of 20% YoY, despite recent job slowdown worries,” the brokerage said in its report.

Brokerage: Morgan Stanley | Rating: Overweight | Target: Rs 242

The global research firm said that the company’s Q4 beat and new launches will drive growth going forward. It observed that it has a balanced portfolio of rental and development projects with good scale up potentials. The margin too is expanding on the back of cost reductions and sales recovery, but the debt may increase marginally to 1.15 times from 1.11 times in FY17. Key risks to the stock include blocked capital in hotel assets and stretched balance sheet.

Brokerage: Citi | Rating: Buy | Target: Rs 300

The global research firm said that Prestige’s March quarter results suggest decent business momentum in a tough environment “with sales normalizing to a great extent post demonetization and decent traction on execution. Margin pressure continues, and remains to be monitored.”

It has trimmed its estimates by 3-14 percent as it factors in more protracted margin recovery. The target has been raised due to updated product portfolio/financials, and lower cost of capital given moderation of interest rates, inline with other companies.