Readying for a comeback
PEPL had a tough time navigating approval challenge, which resulted in weak 9MFY25 presale of INR 100bn vs. INR 230bn of FY25 guidance. Whilst it may unnerve investors looking at short term, the land is not going anywhere and will eventually convert into a launch. We had written earlier in our note ‘Approval challenges may play spoil sport’ about Bengaluru facing approval issues and the delay extended by one quarter. Approval scenario seems to be improving now, with RERA coming in for Prestige, Sobha and Brigade for their Bengaluru projects. We believe that presales underperformance is more of approval delays rather than demand issue, and hence we expect quick presales recovery, with PEPL likely achieving INR 100bn+ presales in Q1FY26, driven by INR 110bn of Indirapuram project. PEPL annuity business has started gaining momentum with initial prelease tieup in BKC, Aerocity and Lakeshore projects. With the recent fund raise of INR 50bn, BS is healthy and debt under control with net D/E as of Q3FY25 at 0.37x. PEPL has a well-diversified model with strong mix of annuity and residential asset class and Pan India presence. PEPL moat lies in acquiring land at low cost and this helps to re-calibrate or offer better pricing to achieve sales velocity and better IRR’s. We remain constructive with BUY rating and SOTP based TP of INR 1,914/sh. (adjusted for fundraise shares dilution).
Prestige Estates – Update – Mar25
Leave a Reply