HDFC Securities Recommends Buying Prestige Estates

In a recent research report dated October 03, 2023, HDFC Securities has expressed a bullish sentiment on Prestige Estates and has recommended a “buy” rating on the stock, setting a target price of Rs 786.

Prestige Estates (PEPL) has achieved its highest-ever annual presales in FY23, totaling INR 129 billion, marking a remarkable 24% year-on-year growth. This outstanding performance can be attributed to the launch of 16 million square feet of new projects and robust presales in the Mumbai Metropolitan Region (MMR), amounting to INR 27 billion. Notably, non-Bengaluru sales have surged to 41%, compared to 20% in FY22.

Looking ahead to FY24, Prestige Estates anticipates a 25% year-on-year growth in annual presales, targeting a range of INR 160-180 billion. This ambitious target is supported by a strong pipeline of launches, valued at INR 275 billion. Notable projects include Prestige City in Hyderabad and Prestige Park Grove in Bengaluru, each with a Gross Development Value (GDV) of INR 70 billion. Additionally, the launch of Prestige Ocean Towers and Prestige Nautilus in MMR holds a total GDV potential of INR 90 billion. Furthermore, in FY24, Prestige Estates will introduce its first project in the National Capital Region (NCR), known as Prestige Bougainvillea Gardens, featuring a saleable area of 3.1 million square feet.

To sustain this growth momentum, PEPL has allocated an annual residential Business Development (BD) capital expenditure of INR 40 billion. HDFC Securities has revised its residential pricing assumptions, increased the valuation of MMR office assets, and elevated the hotel valuation. As a result, they maintain a “BUY” recommendation for Prestige Estates, accompanied by an enhanced Sum-of-the-Parts (SOTP)-based target price of INR 786 per share.

Investors exploring potential investment opportunities may find HDFC Securities’ recommendation on Prestige Estates a compelling factor to consider as they make their investment decisions.

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