Hold Prestige Estate Projects; target of Rs 611: ICICI Securities

ICICI Securities research report on Prestige Estate Projects

Prestige Estates Projects’ (Prestige) residential sales bookings remain strong and we model for gross sales bookings of INR150bn in FY24E and INR165bn in FY25E vs. INR129bn in FY23 led by high-value Mumbai launches. At the same time, the company’s consolidated net debt levels have risen by INR25.6bn over the last 12 months as it continues to incur annual land/stake buyout spend of INR40-50bn and annual annuity capex of INR30-40bn. We expect the company’s net debt levels to rise further to INR84.4bn by Mar’24. With gross incremental pending capex of over INR150bn for annuity assets as of Jun’23, the company’s ability to achieve significant pre-leasing in ongoing/upcoming annuity assets will be the key monitorable going forward.

Outlook

While we retain our target price of INR611/share based on 1x FY24E NAV, we cut our rating to HOLD from ADD post the 8% run-up in stock price in last 3 months. Key upside risk is strong leasing in under construction annuity projects while key downside risk is residential demand slowdown.