Accumulate Prestige Estates; target of Rs 165: Emkay

Emkay Global Financial Services is bullish on Prestige Estates Projects (PEPL) and has recommended accumulate rating on the stock with a target of Rs 165 in its October 30, 2012 research report.

“Prestige Estates Projects, revenue at Rs 2.4bn, was 19% above our estimate predominantly due to revenue factored in from Prestige Edwardian. EBITDA at Rs 725mn with EBITDA margin at 30% was down 207bn QoQ. PAT stood at Rs 457mn, much above our estimate of Rs 349mn due to higher topline and higher interest cost factored in by us in our estimates. Company earns rental income of Rs 509mn, up from Rs 489mn QoQ. Debtors from completed projects marginally came down by Rs 0.7bn from Rs 5.2bn at start of the quarter; continues to disappoint. Company collected Rs 5bn from development projects and spent ~Rs 2.7bn towards construction of development projects. Rs 1.4bn of capex and Rs 1.1bn towards refundable deposit to land owners for new project acquisitions was paid through this surplus cash generation and borrowings of Rs 0.9bn.”
“PEPL reports another quarter of robust sales booking, with company selling more than Rs 18bn worth of development in H1FY13. Company has unsold inventory of 8.1msf valued at Rs 44.4bn, of which 3.msf is from the projects launched in last 9 months valued at Rs 15.6bn. Company intends to launch another 3msf in H2FY13 which should lead to potential sales booking of Rs 30bn. We believe that company will be able to sell 40% of the same in H2FY13 taking the total sales booking of Rs 30bn in FY13.”
“PEPL had launch pipeline of 14 projects with total saleable area (SBA) of ~4msf (PEPL’s share) at end of Q1FY13, of which it launched 4 projects in Q2FY13 with total SBA of ~2msf. PEPL has enhanced this pipeline by adding 15 projects with total SBA of nearly 17msf, taking the total to 19msf. Of this 18msf, PEPL has acquired ~6msf by making refundable advance payments of Rs 2bn to land owners in H1FY13. The balance ~12msf is transferred from the land bank to launch pipeline. We upgrade our rating to Accumulate with TP of Rs 165, citing new acquisitions and buoyancy in sales booking, collections & cash flows generation,” says Emkay Global Financial Services research report. Shares held by Insurance Companies Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. To read the full report click on the attachment

Read More