Axis Direct's research report on Prestige Estates Projects
The management acknowledged pre-sales has slowed down significantly post demonetization and weak sentiments will loom into Q3. However, it is hopeful of a recovery in Q4; thus, has maintained FY17 pre-sales guidance (Rs 35-40 bn; 40% achieved). However, with slowdown in new launches, we expect weak volumes over next few quarters. We lower our pre-sales estimates for H2FY17 and H1FY18.
OutlookHowever, we continue to like Prestige Estates Projects Ltd (PEPL) due to its strong annuity income stream (exit rental of Rs 5.4 bn). Further, PEPL’s operations are concentrated in Bangalore, which we believe will recover faster driven by strong commercial absorption (12-13 msf p.a.), resulting in steady residential demand. PEPL’s stock has declined by 20% post demonetization, which we believe is overdone. BUY.
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