Buy Prestige Estates Projects Ltd For Target Rs.653 - Yes Securities
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Our view
Prestige Estates Projects (PEPL) clocked best pre-sales in its history crossing Rs100bn in FY22 and collected Rs74.66bn while launched 16.77msf in FY22 across the geographies of operation. PEPL achieved its pre-sales guidance for FY22 by recording Rs10.38bn sales. Blackstone’s Phase-II deal concluded in the Q4FY22 which will further help to deleverage. Commissioning of annuity assets should start gradually which will generate cashflow and support capex going ahead. PEPL plans to commission annuity assets of 49.3msf (Cos. shares 33.5msf) which will take currently rentals of Rs4.1bn to ~8-9x in next 6-7years. PEPL launched The Prestige City, Mulund recently and received good response. Mumbai portfolio to act as catalyst and management reiterated Net D/E to remain below 0.5x in long run although most of capex is yet to be spend which reaffirms our confidence on PEPL. We remain confident on PEPL’s performance with robust pent-up demand in residential, increased traction in leasing and recovery in hospitality. We valued 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
* PEPL clocked sales value of ~Rs32.69bn (-23% q/q & 77% y/y) with the volume of 4.85msf (-13% q/q and 76% y/y) in Q4FY22 and collected Rs24.61bn (1% q/q & 39% y/y) with the new launches of 5.01msf (+6% y/y) and completions of 4.96msf. For FY22, the sales value stood at Rs103.82bn (+90% y/y) highest ever sales with a volume of 15.07msf (+85% y/y) at average selling price of Rs6890/sft. while it collected Rs74.66bn (+47% y/y).
* In FY23 the Group envisages to launch over 15msf- The Prestige City at Mulund, Prestige Ocean Towers at Marine Lines, Prestige Daffodils at Pali Hill, in Mumbai, Phase 2 of The Prestige City in Bengaluru, Prestige Bogainvillea Gardens in NCR and Prestige Highline in Chennai, among others.
* For FY22, PEPL reported revenues of Rs63.9bn (-12%y/y) and EBITDA at Rs15.34bn (-22%y/y) and EBITDA margin came in at 24%% (-304bps y/y). And recorded adj. PAT of Rs11.5bn (-59%y/y) due one-off adjustment for asset sale.
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