Maintain ADD on Prestige Estates - Capex cycle begins - HDFC Securities

Mr. Parikshit D Kandpal, CFA, HDFC Securities

Prestige Estates (PEPL) reported another operationally strong quarter with presales of INR 18.5bn (+53% YoY). Gross bookings came in at 2.8msf (+35% YoY). Collections were also healthy at INR 17.7bn (32% YoY). While April/May- 21 has been muted due to lockdown in the key Bengaluru market, robust launch pipeline of 14-15msf could help drive sales in 9MFY22. Proceeds from Blackstone Phase 1 deal led to reduction in net debt to INR 13bn (0.19x net D/E) from INR 82bn at FY20-end. PEPL has embarked on a new asset Capex cycle in Bengaluru/Mumbai and, given the launch ramp-up by peers, it may see some saturation setting in on residential segment. We maintain ADD with an unchanged SOTP-based target price of INR 324/sh. We have tweaked our FY22/FY23 EPS estimates by -1/+1%.

4QFY21 financial highlights: Revenue: INR 22.7bn (+14%/+23% YoY/QoQ, 19% beat). EBITDA margin: 24.3% (-94/+4bps YoY/QoQ, vs 27.9% est.). EBIDTA: INR 5.5bn (+10%/+23% YoY/QoQ, 4% beat). Other income: INR 925mn (1.7x YoY, +15% QoQ, vs est. of INR 451mn). Exceptional item: INR 14.7bn (gain on divestment of certain commercial and retail assets). RPAT: INR 13.4bn (INR 154/587mn in 4QFY20/3QFY21). APAT: INR 2.3bn (15.2x 4QFY20, 4x 3QFY21), 2.6x our estimate on lower-than-expected depreciation / taxes and higher-than-expected other income.

Robust launch pipeline of 14-15msf in residential: Presales (PG share) value/volume grew by 48/27% YoY to INR 14.7bn/2.21msf during 4QFY21. For FY21, presales stood at INR 42.8bn/6.42msf, YoY growth of 13/18%. Collections also improved sequentially to INR 14bn from INR 11bn in 3QFY21 (PG share). Notwithstanding the near-term weakness in presales due to lockdown in 1QFY22, management believes launches of 14-15msf would help recover the presales in 9MFY22. While labour availability has fallen to 70-80%, none of the projects are expected to face significant delays.

Commercial/retail Capex to drive debt: Proceeds from Blackstone Phase 1 deal led to reduction in net debt to INR 13bn (0.19x net D/E) from INR 82bn at FY20-end. With the completion of the Blackstone deal, PEPL is entering a new Capex cycle as it looks to ramp up its asset portfolio to INR 25bn annual rental income from INR 3.5bn (FY22 exit). With completion of these assets by FY26, net D/E could increase to 0.5x.

Shares of PRESTIGE ESTATES PROJECTS LTD. was last trading in BSE at Rs.295.95 as compared to the previous close of Rs. 287.65. The total number of shares traded during the day was 70570 in over 2012 trades.

The stock hit an intraday high of Rs. 299.05 and intraday low of 290. The net turnover during the day was Rs. 20941201.

Source : Equity Bulls

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