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Progressing steadily on launches and BD Healthy response to the three projects launches in 2Q

Prestige Estates (PEPL) recently launched a new project, Prestige Parklane, Bengaluru (INR17.5b GDV). With this, it has launched three projects in 2QFY27 with a combined GDV of INR40b. The other two are Prestige Palm Court in Chennai (INR12.2b GDV) and Garden Breeze at TPC Sarjapur in Bengaluru (INR10.5b GDV). In 1QFY27, it had launched three projects spanning 16.5msf with a combined GDV of INR122b. Consequently, it has launched INR162b in 1HFY27, and in FY27, it plans to launch 23 projects, with a combined developable area of 57.1msf and aggregate GDV of INR573b

Sustenance, new launches to support operational performance

As per our channel checks, all the projects launched in 2Q have received an encouraging response at EoI stage, which resulted in healthy sales conversion. We anticipate strong bookings in all three projects, while the company also had INR245b of existing inventory as of 1QFY27, which would drive pre-sales in 2QFY27 and ahead. We expect pre-sales of INR65-70b (+10-15% YoY) in 2QFY27. PEPL added three new projects in 1QFY27 with GDV of ~INR178b, and in 2QFY27 so far, it has announced BD worth INR116b in MMR and NCR. More additions are likely, which would enhance the growth visibility. We maintain pre-sales growth estimates at 14% CAGR to ~INR388b over FY26-28.

Recent stake sale in PHVL, collections to keep leverage in check

In Aug’26, the board approved the execution of a binding framework agreement between its wholly owned subsidiary, Prestige Hospitality Ventures (PHVL), and CPPIB, wherein the latter would invest up to INR30b through multiple tranches in PHVL for a 28% stake. The proceeds could be utilized for growth capital, debt reduction and operational expenses. Additionally, on the back of healthy presales growth and progress in execution, we expect ~16% CAGR in collections to ~INR251b over FY26-28, which would enable growth while keeping leverage in check. PEPL had net debt of INR119b in 1QFY27 (net D/E at 0.69x), which is comfortable

Valuation and view

* PEPL is well on track to scale up its residential segment on the back of regional diversification as well as continued BD and launches. Recent business development deals continue to replenish the inventory pipeline, thus improving growth visibility over the medium term.

* Ramp-up in the annuity portfolio is progressing well, and upcoming assets are likely to significantly increase the annuity income in the medium term.

* We value the residential business at a 15% premium to the NAV to factor in the growth beyond the existing inventory pipeline. Further, the land bank value is calculated on 1.7x FSI. We value operational annuity assets at a 7.5% cap rate, and ongoing and upcoming assets at an 8% cap rate.

* We have a BUY rating with a TP of INR1,830, indicating a 24% upside potential.

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