Prestige Estates - ‘Rise Of A Falcon’; Axis Securities Initiates Coverage With A Buy Rating

Axis Securities Report

We are initiating coverage on Prestige Estates Projects Ltd. with a Buy recommendation and a target price of Rs 2,195/share, which implies an upside of 35% from the current market price. Our recommendation is supported by-

Diversified Business Model:

The real estate business is highly cyclical and susceptible to various geographical risks. Prestige has mitigated these risks through diversification across verticals and geographies.

Execution Supremacy:

Prestige recorded its best-ever pre-sales of ~Rs 21,000 crore and the highest ever collections of Rs 11,950 crore in FY24. The company delivered 25 million square feet in FY24, completing over 300 projects. Notably, 75% of its sales, amounting to ~Rs 15,700 crore, came from newly launched projects, demonstrating its strong execution capabilities and excellence in delivering large-scale projects.

Robust order book and pipeline of upcoming projects:

Currently, Prestige Estates has a residential portfolio comprising 127 mn.sq.ft across 150 completed projects. The ongoing portfolio includes 66 mn.sq.ft spread across 39 projects. Together, these ongoing and completed projects are expected to yield ~Rs 12,000 crore in free cash flow. This strategic approach underscores Prestige's commitment to growth and its ability to leverage market opportunities effectively.

Strengthening Annuity Stream:

Prestige Estate has embarked on a expansion journey towards it’s annuity portfolio with a capital expenditure of Rs ~11,600 crore for exit rentals worth Rs ~3,800 crore by FY28.

We have used a DCF approach to value the real estate developer, taking into account a going-concern assumption.

We believe an earnings-based valuation would not reflect the correct picture as the income statement lags the actual cash flows

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.