Buy Prestige Estates Projects; target of Rs 750: Motilal Oswal

Motilal Oswal's research report on Prestige Estates Projects

Prestige Estates Projects (PEPL) maintained strong momentum in pre-sales, with bookings up 30% YoY at INR39b (5% above estimate), in line with the quarterly run rate of the company’s FY24 guidance of INR160b.  Growth was largely driven by strong response to its Bengaluru project launch (Prestige Lavender fields), which contributed over 50% of pre-sales during the quarter as 85% of the project sold out. In 1QFY24, PEPL launched just one project with developable area of 3.1msf. Sales volumes were up 6% YoY, while blended realizations were up 28% YoY at over INR10,000/sqft largely due to higher pricing and premium mix.

Outlook

We incorporate a higher stake in Mumbai commercial projects and an increase in the hospitality portfolio, while higher capex assumptions lead to an increase in FY24E net debt to INR80b. Thus, our SOTP-based TP is revised to INR750, indicating 28% upside potential. We reiterate BUY rating on the stock.