Home / Markets / Mark To Market /  Prestige Estates stock up, but watch the debt appetite

Prestige Estates Projects Ltd is eyeing pre-sales of more than 12,000 crore in FY23, with residential projects in key markets such as Bengaluru and Mumbai likely to contribute 8,000 crore and 2,500-3,000 crore, respectively. This guidance is higher than the record sales bookings of 10,382 crore in FY22.

Little wonder then the stock rose 5% on the NSE on Thursday in reaction to the upbeat commentary.

Heading northwoard
View Full Image
Heading northwoard

The Mulund project in the newly ventured Mumbai market is seeing good traction, the management told analysts in its earnings call on Wednesday. It plans to launch Daffodils, Pali Hill & Ocean Towers, Marine Lines in FY23 along with subsequent phases in The Prestige City, Mulund. In Q1FY23, the Mumbai market accounted for around 24% of its gross sales booking, the management said.

You might also like

How not to lose your airline bags amid 'airmageddon'

Common-sense investing by Carnelian's Vikas Khemani

What's driving investor interest in Eicher Motors stock?

ICRIER dismisses liquor lobby's allegations

“The Mumbai region was seen as a litmus test for Prestige Estates’ success and the solid initial response to its Mulund project aids long-term revenue visibility for the company," said an analyst with a domestic brokerage house requesting anonymity. However, the FY23 pre-sales target set for Mumbai is ambitious, he said. “We expect the company to do around 2,000 crore of sales in this city," he said.

Apart from the sales trajectory in Mumbai, investors will also need to monitor its net debt levels. Prestige Estates is on a spree to launch new residential and commercial projects and is also foraying into new markets, so the increased need for capital could push its debt higher.

The company’s net gearing (net debt to equity ratio) is comfortable at 0.4x and is expected to rise to 0.5x over the next few quarters, said analysts at Jefferies India Pvt. Ltd. In Q1FY23, net debt increased by 550 crore sequentially on investments in the ongoing projects and capital expenditure for hotel assets. The company aspires to increase its presence in the National Capital Region and Pune along with the slated launches in the Bangalore, Mumbai, and Hyderabad regions.

The company’s management aims to maintain net debt to equity ratio at around 0.5x for FY23. Investors would remember that Prestige Estates was struggling with a situation of elevated leverage and had to sell some of its assets in 2021 to the Blackstone Group to pare debt.

Meanwhile, so far this calendar year, the Prestige Estates stock has declined by around 4%, lower than sector index Nifty Realty’s 9% fall. It is 13% away from its 52-week high of 554.90 seen in January. Analysts said near-term positives are largely priced-in, so the stock’s recovery from the current levels will be gradual.

Elsewhere in Mint

Long Story reveals how expensive and rare orchids are smuggled out of India. In Opinion, Nitin Pai draws nation-building lessons from a Bollywood song. Bibek Debroy writes on India's Amrit Kaal modernity. ED has made India's crypto winter colder, argues Andy Mukherjee.

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.
Post your comment

Recommended For You

Trending Stocks

Get alerts on WhatsApp
Set Preferences My ReadsWatchlistFeedbackRedeem a Gift CardLogout