Buy Prestige Estate Projects Ltd For Target Rs. 2,300 By Elara Capital Ltd
Q3FY25 results: robust demand outlook
Prestige Estate (PEPL IN) results came broadly in line with our expectations. Sustained sales aided in overall presales to INR 30bn vs our estimates of INR 33bn in the absence of new launches. Management is confident of achieving full-year presales target of INR 240- 250bn, driven by ~INR 300bn of new launches where PEPL is confident of selling 40% of inventory at launch. Profitability in the residential segment is also improving – 9MFY25 residential EBITDA margin at 26% vs 23% in FY24. Core operating cash flow was healthy at ~INR 9bn covering capex spent on annuity and hospitality assets. Investments in land and stake increases amounted to INR 24bn, driving QoQ rise in net debt to INR 60bn. Exit rentals in the annuity portfolio stood at INR 7.5bn and estimated to increase >4x to INR 43bn in FY29. Notably, the office segment recorded 4.5mn sqft of leasing in CY24 while average occupancy in office and retail portfolios at ~90% & 99%, respectively.
Reiterate Buy with a SOTP-based TP of INR 2,300: We believe PEPL offers a unique combination of scale, diversity and dominance. This calls for the developer to command industry-leading valuation. We reiterate Buy with a March 2025E TP of INR 2,300. A shift away from a disciplined capital allocation strategy is a key risk.
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SEBI Registration number is INH000000933
