Will meet FY17 sales guidance of Rs 3250 cr: Prestige Estates

Property development company, Prestige Estates posted weak set of first quarter earnings with revenue down 37 percent to Rs 944.8 crore year-on-year (YoY) and net profit falling 58 percent to Rs 47.7 percent (YoY).

In an interview with CNBC-TV18, Irfan Razack, CMD of Prestige Estates said that the revenues fell due to less recognition in this quarter but he is confident to meet the sales guidance of Rs 3,250 crore in FY17.

The company has unrecognized revenues of Rs 6,987 crore as on June 30, 2016.Below is the transcript of Irfan Razack’s interview to Sonia Shenoy and Anuj Singhal on CNBC-TV18.Sonia: It is not only with Prestige Estates, but the entire industry is going through a substantial slowdown. The results are much worse than what we saw in the last quarter. What is going wrong?A: Nothing is going wrong. Quarter-on-quarter (Q-o-Q), year-on-year (Y-o-Y), the sales figures are actually up compared to June, 2016. If you compare it to June 2017, we are up by about 12 percent. We have done about Rs 637 crore worth of sales during the quarter.Now, as far as revenues go, it is a function of the revenue recognition when the revenue recognition kicks in for any particular project. So, you will always have that lumpiness Q-o-Q and we should not read too much into it. We always have to look at the year as a whole, especially in the business that we are in.Suddenly, you will see one quarter jumping up, another quarter going a little low, but net-net if you look at the profit after tax (PAT) margins, they are pretty much stable, the way it was there in the previous quarter. We had clocked in about 8 percent PAT margins.We, from here hopefully, also intend to take it up slightly, but that is the way things are. As long as we are able to get our sales revenue -- and that eventually will land up into booking into revenues and profits and all of it -- we are in a good, secure and solid wicket.Apart from residential sales, there are also in other different asset classes like retail and office and both these segments are robust and doing extremely well. We are in a position of currently -- apart from what we are constructing, the rest of the inventory which we had -- we have no vacancies.Anuj: The stock is reacting to quarterly numbers and because Bengaluru in general, has been more resilient market, but let us talk about the yearly numbers then. What kind of growth do you foresee not just for this year, but for the next 2-3 years?A: We have always posted some very extremely good, robust growth Y-o-Y. If you look at our sales numbers and this year also, we have projected that we will do an overall sales of around Rs 3,250-3,500 crore, which we will definitely not only achieve, we will exceed this because we are working on a certain strategy, certain projects. In many other cities have also got approvals and we are now going to do some launches. So, all of it is definitely going to help that.At the same time, we also have to keep in mind that now, we have the real estate regulatory bill in place and the rules for various states are slowly getting done and once all that happens, we will have to also comply with the provisions of the rules and the bill itself.But net-net, I believe, I am quite positive and I am quite sure that whatever commitment that we have done, we will achieve it and not only achieve it, we will surpass it. We have always posted 10-15 percent growth Y-o-Y and this year also, I believe not only on sales, but also on revenue and profits, we are going to do that.Like I said, apart from the residential sales, fortunately for us as a company, we also have two other asset classes like retail and rental income, which has been growing Y-o-Y and since that sector has been pretty robust, we have almost zero vacancies and then, whatever we are producing will get into the revenue stream.Sonia: In order to meet this Rs 3,250 crore target that you spoke about for FY17 in sales, what kind of project pipeline do you have over the next 3-6 months?A: We have quite a number of projects in Bengaluru, Hyderabad, Kochi as well as in Chennai. All these, put together, we are also looking at the approvals falling in place. Especially now, since we are talking of the June quarter, we are already into September. In September quarter also, we will close out pretty nicely.Having said that, I am pretty confident that we will achieve these numbers. Now, what happens is the names of the projects are already there, but depending on which one gets approved faster, that is the one that comes to the market. So it will be a little premature for me to discuss on the names of these projects, but then we are on the job.Sonia: Since you are a major player in the Bengaluru market, I wanted to ask you, a lot of technology companies are going through a slowdown because of the Brexit issues and we see that generally, when technology slows down, the real estate space also slows down in the Bengaluru market. Are you facing any kind of pressure at all because of the slowdown that we are seeing in technology?A: Currently, the trend is slightly different. The demand for office space especially tech space is growing. I see it going this way at least for a couple of years from now. Then we will have to see because as we go along, there are a lot of more robotic technologies that are coming up, which may replace the human intervention itself. When that happens, then there will be some contraction, but then we will also have to gear up and look at that angle also. Till then, I believe that we need to just take things as they come.