Buy Prestige Estates Projects Ltd For Target Rs.653 - Yes Securities
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Resi. sales in different trajectory, sustenance is key; MMR projects progressing with good pace
Our view
PEPL recorded best pre-sales in its history crossing Rs42.6bn in single quarter and collected Rs24.3bn while launched 8.3msf in Q3FY22 across the geographies of operation. PEPL has raised its FY22 sales guidance of Rs70-80bn to Rs100bn as already achieved Rs71.1bn in 9MFY22. Phase-II of Blackstone deal concluded in the current quarter which will further help to deleverage. The commissioning of annuity assets is starting gradually which will start generating cashflow and support capex going ahead. PEPL plans to commission annuity assets of 49.3msf (Cos. shares 33.5msf) which will take currently annuity of Rs3.6bn to 10x in next 6-7years (excluding hospitality); Mumbai assets will act as catalyst. Management also reiterated, will not allow Net D/E to cross 0.6x in long run although most of capex is yet to spend which reaffirms our confidence on PEPL. We remain confident on PEPL’s performance with robust pent-up demand in residential, increased traction in commercial leasing and recovery in hospitality. We rolled our estimates to FY23 and value PEPL on SoTP based target 1xNAV of Rs653/share at WACC 11.4%, Cap rate 9% and 15x EV/EBITDA FY23.We maintain our ‘BUY’ rating.
Result Highlights
In Q3FY22 achieved record consolidated presales of Rs42.7bn up by +110.6%y/y (102% q/q) driven by strong volumes of 5.58msf (56.7%q/q & 87.2%y/y) backed good response for Prestige city, Great Acres and Beverely Hills. Collected Rs24.3bn (56.7%q/q & 70%y/y) and launched 8.3msf in quarter while delivered 1.02msf. In 9MFY22 PEPL achieved presales of Rs71.1bn up by 97%y/y, collected Rs50bn up by 51% y/y, launched 11.8msf while delivered 9.3msf.
PEPL reported revenues of Rs13.8bn (2.5%q/q & -25.4%y/y) on the back of robust collection and annuity. Reported EBITDA at Rs4.04bn (3%q/q & -9.8%y/y) while EBITDA margin has improved to 29.3% by 17bps q/q and 508bps y/y on the back of product mix. In Q3FY22 recorded adj. PAT of Rs933mn (22.9%q/q & 58.9%y/y) due to incremental interest expense.
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