Song of the South to aid Q2 results: Prestige Estates

Prestige Estates posted 10 percent consolidated profit after tax (PAT) but cost overrun in Chennai project hurt its operating profit margins for the June quarter, says Irfan Razack, CMD of Prestige.Speaking to CNBC-TV18, Razack says the company refrained from launching projects in the June quarter as it wanted to concentrate on project completions and utilise its existing inventory first. Talking about the launches, he said Prestige launched its Bangalore project- Prestige Song of the South in August. This project of over 2,000 homes will help company return to its earlier numbers, he says, adding, two major projects in Kochi and Chennai did not get approved, but will be launched soon.Below is the transcript of Irfan Razack’s interview with Latha Venkatesh & Sonia Shenoy on CNBC-TV18.Sonia: Stock is down about three percent perhaps because investors are a bit disappointed with the way the margins have crunched down this time. You did mention that some of your costs have gone up for your nearer completion projects. Just take us through whether these costs will recur in the quarters to come and what could be the average margins for the next couple of quarters?A: This quarter we have reported a consolidated profit after tax (PAT) margin of 10 percent which is in line with what has happened in the previous quarters. I don’t see it either going up substantially or going down substantially. The EBTIDA margins have taken a little bit of a change only because we had one project which we are doing in Chennai where we had some cost over runs and that got booked in this quarter. Going forward the business that we are in we could always have some savings in some project or they could always be some additional thing but I don’t think there will be any major blip for us to really get worried about.Latha: Optically the operating margins from a 24 percent a year ago to less than 13 percent this quarter looks like it is something seminal. What can you climb back to at all in terms of an average for the year in terms of operating margins?A: The operating margin will come back to the same thing. It is just because we had to pick up that entire additional cost for one particular project which is getting closed out. That is the reason why that difference happened. If you look at in spite of it because we have clocked in higher revenues and higher turnover fortunately the PAT margin is exactly the same. So, may be if that hadn’t happen may be my PAT margins would have been higher so like you said it is optically different story but the business that we are in these contingencies have to be looked into.