Stock Of The Day: Prestige Estates Sign Rs 2,001-Crore Deal—Analyst Views, Key Levels

Prestige Estates Projects Ltd. has entered into a landmark deal with the Abu Dhabi Investment Authority, or ADIA, and Kotak AIF for Rs 2,001 crore, or about $240 million, to capitalise on growth opportunities in the residential sector.

This includes developing projects with a gross development value, or GDV, of Rs 18,000 crore across four cities.

"Given the increasing demand and consolidation in the sector, this deal will help in accelerating growth and expansion," said Venkat K Narayana, Group Chief Executive Officer of Prestige Group. "These funds will fuel the development of greenfield residential projects across the cities of Bengaluru, Mumbai, Goa, and NCR with a combined GDV of over Rs 18,000 crore, contributing significantly to the top line.”

• Support: Rs 967 (eight-day low)

• Resistance: Rs 1303 (two-month high)

Shares of Prestige Estates gained 4.87% to Rs 1,227 apiece after the announcement of the deal. The stock was trading 3.70 higher at Rs 1,213.25 apiece, compared with a 0.70% gains in the benchmark Nifty 50 as of 9:45 a.m.

On March 21, Prestige Estates Projects said it had acquired a land parcel of 62.5 acres in the Indirapuram extension in the National Capital Region.

The acquisition is in line with the company's aim to expand its footprint in the real estate market in the NCR. The 62.5-acre land, acquired for a total consideration of Rs 468 crore, will be developed primarily as a residential project under ‘The Prestige City’ format, which has seen success in Bengaluru, Mumbai, and Hyderabad, the company said in an exchange filing on March 21, 2024.

Prestige Estates plans to launch the project within the next two quarters and finish the development in four years.

Motilal Oswal expects that Prestige Estates Projects is on track to exceed its full-year guidance, despite the brokerage having lowered its FY24 revenue, Ebitda and PAT estimates by 17%, 14%, and 15%, respectively, due to muted project completions, moderate revenue recognition in 3Q.

The brokerage maintains a 'buy' rating on the stock with a target price of Rs 1,465 apiece as of Feb. 14.

Motilal Oswal has also incorporated better-than-expected performance on bookings and marginally raised their FY24 and FY25 estimates by 5% and 4%, respectively.

With the company enhancing its growth visibility in its residential segment by expanding its project pipeline and making advances on its key commercial projects, a further re-rating is imminent, the brokerage said.

Of the 19 analysts tracking the company, 15 maintain a 'buy' rating, one recommends a 'hold' and three suggest a 'sell', according to Bloomberg data.