SynopsisPrestige Estates has lined up new residential launches and its potential is estimated to be around Rs 15,000 crore. In addition to pent-up demand in residential, increased traction in commercial leasing is also helping Prestige Estates. Analysts rating in this counter increased after its recent share price correction.
Prestige Estates Projects surprised the street with its solid set of numbers for the second quarter of 2021-22. For instance, its adjusted net profit for the quarter grew by 27% q-o-q and 32% y-o-y. The pent-up residential demand has helped Prestige Estates report record single quarter new sales of Rs 2,112 crore, which was up by 88% y-o-y and 188% q-o-q. Its collections also jumped to Rs 1,552 crore, up by 33% y-o-y and 52% q-o-q, because it was able to complete 8.08 million square feet during the quarter.
To benefit from the sectoral recovery, Prestige Estates has lined up new residential launches and its potential is estimated to be around Rs 15,000 crore. It has already launched 3.49 million square feet in the second quarter and with more launches expected in coming quarters, analysts believe that the new sales of Prestige Estates will be between Rs 7,000 and Rs 8,000 crore during 2021-22, compared to the previous estimate of Rs 6,000 crore. Its Prestige Cosmos project in Mulund, a Mumbai suburb, is in final stages with Rera and is expected to be launched in the third or fourth quarter of 2021-22. The recently acquired project from ARC, —Prestige Ocean Towers, Marine Lines, Mumbai, has all approvals in place and is getting developed in partnership with DB Realty.
In addition to Bengaluru and Mumbai, Prestige Estates has strong presence in other cities also. For instance, it has won 7.5 acres of land parcel in Hyderabad through government auction and its Beverly Hills project is expected to get Rera approval soon. In addition to pent-up demand in residential, increased traction in commercial leasing and recovery in hospitality are also helping Prestige Estates. With new projects in Bengaluru, Chennai and Pune, Prestige Estates plans to complete around 2.5 million square feet of commercial projects by 2022-23.
Analysts rating in this counter increased after its recent share price correction. Strong balance sheet is another factor attracting analysts to this counter. Though its net debt/equity ratio moved up to 0.43 times in second quarter due to payments towards land acquisitions, it is not a big worry because its nets debt/equity is expected to come down to around 0.2 times by third quarter due the phase 2 of Blackstone deal. Prestige Estates has also informed analysts that it will maintain its debt/equity ratio below 0.6 times in the long term. Its average cost of borrowing is at a reasonable 9.8%.
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(Originally published on Dec 06, 2021, 06:30 AM IST)
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