Markets
Prestige Estates’ diversification focus is a positive; watch out for debt trends
Summary
- PEPL targets a 25% year-on-year presales growth in FY24, supported by a promising launch pipeline of 76msf across MMR, Hyderabad, and its home turf, Bengaluru
Real estate developer Prestige Estates Projects Ltd (PEPL) reported a bumper FY23, with the company's highest-ever annual presales of ₹2,900 crore, an increase of 24% year-on-year. Boosted by 16 million square feet (msf) of launches and robust presales in the Mumbai Metropolitan Region (MMR), PEPL also logged record collections of ₹9,800 crore.
Sales from non-Bengaluru markets surged from 20% in FY22 to 41% in FY23. PEPL targets a 25% year-on-year presales growth in FY24, supported by a promising launch pipeline of 76msf across MMR, Hyderabad, and its home turf, Bengaluru, the management said.
“MMR is turning out to be an important “cog in the wheel" in PEPL’s growth trajectory. In FY23, MMR accounted for 21% of sales booking, which is a noteworthy accomplishment," said analysts at Antique Stock Broking Ltd.
The company has lined up three upcoming projects or phase launches in MMR, including Prestige City Mulund, Ocean Towers, and Prestige Nautilus. The other markets to help the company achieve guided pre-sales growth will be Hyderabad and Chennai, added the Antique report.
In related news, PEPL has boosted its presence in the MMR’s annuity portfolio by acquiring its partner DB Realty's stakes in two key projects-- BKC 101 and Turf Estate.
While the company’s diversification efforts are positive, investors need to monitor the firm's debt, which increased by ₹2,200 crore in FY23 to ₹5,560 crore, a consequence of escalating capital expenditure and investments, said analysts at Kotak Institutional Equities.
"Prestige is pursuing an aggressive growth strategy for its annuity portfolio. Sales momentum was strong in FY2023, and while the residential segment is likely to generate strong free cash flows, the timely execution in the annuity segment will be the key for further value generation," added Kotak report.
The impact of subdued job environment in its key market Bengaluru, which is an IT hub, is another key monitorable.
Over the past year, Prestige Estates' stock has risen nearly 10% on the National Stock Exchange, lagging the Nifty Realty index, which rose around 20%.
