Motilal Oswal's report on Prestige Estates Projects
Strategic success, which led to radical scale-up in operations over FY11-15 for Prestige Estates (PEPL), is under constant evaluation. Future strategy appears effective as it is aware of the pertinent challenges.
Market share gain in Bangalore is an immediate focus. Gradual entry plan into newer markets (5 cities are under evaluation including Mumbai) to overcome possible home market headroom post FY17-18.
Target of INR7.5-8b of pre-sales in Development Company (Dev Co) and ~INR9b of rentals over the next four years. Strong portfolio of maturing rental assets offers avenues to grow through re-deployment of capital.
Cash flow from core-operations is posting consistent growth towards self-sustenance. Replication of past strategic success key to further re-rating.
The stock trades at 1.9x FY17E P/B (~15% FY17E RoE) and 18% discount to NAV. Maintain Buy with a target price of INR320, says Motilal Oswal research report.
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