Prestige stock on the rise, appetite for debt too


Prestige Estates Projects Ltd is considering pre-sales of more than 12,000 crore in FY23, with residential projects in key markets such as Bangalore and Mumbai likely to contribute 8,000 crores and 2,500 to 3,000 crores, respectively. This forecast is higher than the record booking sales of 10,382 crore in FY22.

It’s no wonder, then, that the stock rose 5% on the NSE on Thursday in response to the upbeat comment.

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The Mulund project in the newly ventured Mumbai market is seeing good traction, management told analysts on its earnings call on Wednesday. It plans to launch Daffodils, Pali Hill & Ocean Towers, Marine Lines in FY23 as well as subsequent phases in The Prestige City, Mulund. In the first quarter of FY23, the Mumbai market accounted for around 24% of its gross sales bookings, management said.

“The Mumbai region has been seen as a litmus test for the success of Prestige Estates and the strong initial response to its Mulund project is helping long-term revenue visibility for the business,” an analyst at a brokerage firm said. national brokerage who requested anonymity. The pre-sales target set for Mumbai is ambitious, he said. 2,000 crore sales in this city,” he said.

Along with Mumbai’s sales trajectory, investors will also need to watch its net debt level. Prestige Estates is rushing to launch new residential and commercial projects and is also foraying into new markets, so the increased need for capital could drive up its debt.

The company’s net debt (net debt-to-equity ratio) is comfortable at 0.4x and is expected to reach 0.5x in the coming quarters, analysts at Jefferies India Pvt said. ltd. In Q1FY23, net debt increased by 550 crores sequentially on investments in ongoing projects and capital expenditure for hotel assets. The company aspires to increase its presence in the National Capital Region and Pune, alongside planned launches in Bangalore, Mumbai and Hyderabad regions.

Company management aims to maintain the net debt to equity ratio at around 0.5x for FY23. Investors will recall that Prestige Estates was in a high debt situation and had to sell some of its assets in 2021 to the Blackstone Group to reduce its debt.

Meanwhile, so far this calendar year, Prestige Estates stock is down around 4%, less than the Nifty Realty sector index’s 9% drop. It is 13% off its 52-week high of 554.90 seen in January. Analysts said the short-term positives are broadly priced in, so the stock’s recovery from current levels will be gradual.

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