Summary of Prestige Estates Q2 FY23 Earnings Call
This is a detailed summary of the Prestige Estates Q2 FY23 earnings call focusing on the points requested.
Financial Performance
- First half revenue was 4,448 crores, with EBITDA of 1,791 crores, reflecting an EBITDA margin of 38.43%.
- PAT for the first half was 541 crores, with a margin of 12.18%.
- As of September 30th, net debt was 3,592 crores, and the debt-to-equity ratio is down to .21.
Margin Guidance
- EBITDA margin guidance for the new launches in H2 FY23 is 35%.
- PAT margin on new launches in H2 FY23 is expected to be around 15% to 18%.
Business Segment Performance
- Office Portfolio: Leasing activity remains robust with a 90% occupancy rate across the existing portfolio.
- Exit rental for the office segment is projected to reach 3,326 crores by FY28.
- Retail Segment: Strong performance in all malls with an occupancy rate of 99.2%.
- Exit rental for retail is expected to reach nearly 1,000 crores by FY29.
- Hospitality Segment: Operating hotels delivered revenue of 415 crores, with a gross operating profit margin of 44%.
- Revenue in the hospitality segment is projected to reach 2,346 crores.
Management Guidance for the Future
- The company is working on several business development opportunities that will be added to its pipeline.
- Management expressed confidence in achieving the pre-sales guidance of 24,000 crores for FY23.
- They expect strong pre-sales in H2 FY23 due to a robust launch pipeline.
- The company is focusing on disciplined growth and delivering sustained value to its stakeholders.
Key Risks in the Business
- Delays in Obtaining Approvals: The management acknowledged delays in obtaining approvals, which is a concern for the timely launch of projects. They expect the situation to improve after the elections in Maharashtra.
- Potential Oversupply in H2 FY23: There is a potential risk of oversupply in the market in H2 FY23, as most developers are planning a significant number of launches during this period.
Industry Outlook
- Demand for residential real estate continues to be strong, particularly in the mid-income segment.
- There is a pent-up demand for projects in all the cities where Prestige Estates operates.
Key Highlights
- Successful completion of the QIP in Q2, raising 5,000 crores.
- Consolidation of stakes in related party entities, resulting in the addition of approximately 20,000 crores of GDV and 8,000 crores of EBITDA.
- Plans for an IPO of the hospitality business are underway.
- The company is focusing on maintaining its product quality and pricing discipline to ensure continued success.
Disc: Invested and may be biased
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