Buy Prestige Estates; target of Rs 700 : HDFC Securities

HDFC Securities' research report on Prestige Estates

Prestige Estates (PEPL) registered strong presales of INR 39bn (+30%*+1% YoY/QoQ) on the back of 3.1msf of launches which contributed 50% towards presales value. Pre-sales from Mumbai were INR 6bn, contributing 15% while Bengaluru contributed INR 29bn (73% to total presales). For FY24, it expects to achieve 25% growth in annual presales over FY23 to INR 160-180bn. It expects to achieve this on the back of a strong launch pipeline of with around INR 275bn worth of launches. This includes Prestige city in Hyderabad and Prestige Park Grove with GDV of INR 70bn each. Along with this Prestige Ocean Towers (60% economic interest and Prestige Nautilus in MMR will also be launched with total GDV potential of INR 90bn. It will launch its first project in NCR, Prestige Bougainvillea Gardens in FY24 with saleable area of 3.1msf. On back of higher land/JD related payment of INR 13bn during the quarter, net debt increased to INR 64.8bn, from INR 55.7 bn in Mar-23. Gross debt, however, was stable at INR 75.7bn (vs INR 75bn in Mar’23). To maintain the growth momentum, PEPL is targeting residential BD capex of INR 40bn annually.

Outlook

We maintain BUY, with an increased SOTP-based TP of INR 700/sh, to factor in better than expected pre-sales and improving visibility on office assets with financial closure of BKC project.

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