Along expected lines, Prestige Estates Projects (PEPL) has seen Q2FY22 gross residential bookings rising 88% YoY in value terms to Rs21.1bn (Isec estimate of Rs20bn) on the back of Rs8.5bn of sales from the Great Acres plotted development in the Prestige City, Bengaluru project. With a strong pipeline of launches of 10msf in H2FY22, this momentum in residential sales is expected to sustain heading into the festive season. The company is gearing up to launch three new projects in Mumbai across 6msf in Mulund, Byculla and Bandra and the success of these launches is key to the company achieving its vision of Rs100bn of annual sales bookings by FY24-25E. We revise our target price to Rs445/share (earlier Rs382) incorporating new capex projects but downgrade our Rating to REDUCE from ADD post the 63% appreciation in stock price over the last three months. Key upside risks to our call are faster than expected rise in residential prices and strong leasing for upcoming annuity projects.
- Strong residential sales on back of plotted development launch: PEPL has reported gross sales bookings of 3.5msf worth Rs21.1bn in Q2FY22 vs. our estimate of Rs20bn (up 100% YoY in volume terms and 88% YoY in value terms) at an average realisation of Rs5,966/psf. Sales for Q2FY22 were largely driven by the launch of plots under the name of "The Great Acres" at The Prestige City in Sarjapur, Bengaluru where the company was able to sell over 800 plots spread over 1.7msf at Rs5,000/psf or a sale value of Rs8.5bn in Sep'21. The Prestige City has a total area of 12.8msf and further phases consisting of 1/2/3BHK apartments under "Avalon Park" and 3/4BHK villas under "Aspen Greens" are expected to be launched in Oct'21. As per our channel checks, the company is also hosting its annual activation event christened "Keys2021" between 22-24th Oct'21 where the company's new launches and existing projects across South India and Goa/Ahmedabad/NCR will be showcased to home buyers and will help to drive sales bookings in Q3FY22.
- Robust residential launch pipeline for H2FY22: As per PEPL management, there is a large pipeline of residential launches of 10msf lined up in H2FY22 across South India, Noida (NCR) and Mumbai (Jasdan Classic, Byculla and Cosmos, Mulund projects). As per the company, three Mumbai launches spread over 6msf are lined up for launch in Q3FY21 and final leg of approvals are in process. With the launch of the new Mumbai and Noida projects, the company is targeting gross sales bookings of Rs60-65bn in FY22E and has a medium-term target of reaching Rs100bn of gross sales bookings by FY24-25E of which 50% share may be ex-Bengaluru.
- Fresh round of capex initiated across South India and Mumbai: The company has given guidance for an annual exit rental income of Rs3.5bn by Mar'22 and is embarking on a fresh round of capex with incremental committed capex of Rs35-40bn over FY22-25E of which 7msf is in Mumbai with the balance largely in Bengaluru and other markets in South India.
Shares of Prestige Estates Projects Limited was last trading in BSE at Rs. 471.15 as compared to the previous close of Rs. 483.90. The total number of shares traded during the day was 50312 in over 1891 trades.
The stock hit an intraday high of Rs. 487.55 and intraday low of 467.80. The net turnover during the day was Rs. 24007741.00.