Buy Prestige Estates Projects Ltd for the Target Rs.1,659 by Motilal Oswal Financial Services Ltd
Strong pipeline to fuel presales
Prestige Estates (PEPL) has a diverse portfolio with a presence in the residential, office, retail, and hospitality segments. The company’s 1HFY26 incremental BD of INR331b and a launch pipeline of INR770b are expected to drive a presales CAGR of 40% over FY25-28, reaching INR463b by FY28. PEPL is expanding its office & retail segment to 50msf and scaling up its hospitality portfolio. As a result, office and retail rental income is likely to cumulatively clock a 53% CAGR to reach INR25.1b, while hospitality revenue is expected to post a 22% CAGR over FY25-28, reaching INR16.0b. Commercial income is projected to improve to INR33b by FY30E as all underconstruction assets become fully operational. PEPL has rapidly gained market share in MMR, entered the NCR market with significant traction, and is also scaling up in Pune, which will generate incremental income streams. Therefore, we remain highly confident in PEPL’s growth prospects and reiterate our BUY rating with a TP of INR2,295.
Strong pipeline to result in 40% CAGR in presales
* Presales in FY25 experienced a dip, as only 26msf of launches materialized, most of which were skewed towards 4Q, leading to a 19% YoY decline in sales. These launches were spilled over to FY26 as approvals were held up by elections and other geopolitical reasons. In 1HFY26, presales stood at INR181.4b, rising 157% YoY, led by major residential launches such as Prestige Indirapuram in NCR (GDV of INR115b), Prestige Pallavaram Gardens in Chennai (GDV of INR34b), and four plotted developments in Bengaluru (INR26b). Notably, the Indirapuram launch alone contributed ~46% of presales in 1HFY26, reflecting impressive sales velocity.
* PEPL has planned 18 projects with a GDV of INR272b for launch in 2HFY26, including major mid-segment projects such as Prestige Falcon City in Bengaluru (GDV of INR51b), Evergreen in Bengaluru (GDV of INR49b), Prestige Forest Hills phase 2 in Mumbai (GDV of INR35b), and Prestige Garden Trails in Mumbai (GDV of INR20b).
* There will also be three luxury launches – Prestige Forest Edge in Bengaluru (GDV of INR13b), Prestige Bayfront in Goa (GDV of INR15b), and Prestige Rock Cliff in Hyderabad (GDV of INR9b).
* Apart from INR272b of launches planned for the rest of FY26, the company has INR100-150b of projects on standby for launch.
* These strategic launches spanning key metropolitan regions will strengthen the company's presence across India's high-growth real estate markets.
* The introduction of these large-scale developments, along with the ongoing inventory of INR199b, is expected to significantly boost PEPL's sales performance, with sustenance sales estimated to contribute at least 30% of presales.
* This surge in sales is expected to significantly contribute to the annual pre-sales guidance of INR270b for FY26 (67% already achieved in 1HFY26), reinforcing the company's strong market position. ? Beyond its upcoming launches, PEPL has built a robust project pipeline of ~INR500b, currently at various stages of planning and approval.
* The company added 12 projects in 1HFY26 (eight JDA and four owned) with a GDV of INR331b, marking the highest business development activity among its peers during the period. These projects are guided for launch over the next four quarters.
* This extensive pipeline is set to drive long-term growth, with presales projected to reach INR463b by FY28, translating into a 40% CAGR (2.7x growth from FY25 levels).
* By strategically expanding its portfolio across high-demand regions and maintaining a steady pipeline of future projects, PEPL aims to capitalize on emerging market opportunities, strengthen its revenue base, and sustain its leadership in India's real estate sector. The company's proactive approach to project execution and market demand assessment positions it for sustained growth and enhanced shareholder value in the coming years.
Valuation and view
* As the company advances its growth trajectory in both residential and commercial segments and unlocks value from its hospitality segment, we believe the stock is set for a further re-rating.
* We reiterate BUY with a TP of INR2,295, indicating a 38% upside potential.
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