JM Financial's research report on Prestige Estate Projects
Prestige Estates (PEPL) reported robust operations as company benefitted from projects launched in 4QFY18. Pre-sales volume was at 1.11msf and sales value at INR 7.6bn (+69% YoY) during the quarter. Completed inventory declined by 0.67msf during the quarter (60% of sales). Collection from residential segment was reported at INR 7.5bn (vs. INR 8.0bnquarterly average). PEPL has shifted to completion method of accounting under Ind AS 115. Net debt increased by INR 8.2bn to INR 72.8bn primarily on CapitaLand stake acquisition (INR 3.4bn) and consolidation of INR 2.8bn debt related to the acquisition. While the increase in debt is a concern, completion of commercial stake sale will reduce the leverage materially.
Outlook
Performance in new geographies, future scalability and leverage would be key monitorables going forward. Maintain BUY with TP of INR375 as annuity book gives us comfort on valuation. However, weak demand and rising yields remains the key risks
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