Switch To Prestige Estates From Oberoi Realty, DLF To Capture Growth, Says Yes Securities

Yes Securities Report

Prestige Estates Projects Ltd. has achieved the presales of Rs 210 billion for FY24 and guided Rs 260-270 billion presales for FY25 on the back of a strong launch pipeline of Rs 600 billion gross development value and Rs 120 billion ongoing inventory.

We valued the residential business at Rs 273 billion. Company also plans to take its annuity multifold to Rs 50 billion in next two-three years, which we valued cumulatively at Rs 410 billion at 11.7% weighted average cost of capital and 8% Cap rate for office (6.5% for retail). As the company plans to list its hospitality arm, we valued it at Rs 146 billion at 25 times FY27 enterprise value/Ebitda.

Prestige Estates clearly stands out amongst peers with the superior growth prospects for residential segment, multifold annuity growth and value creation by listing the hospitality arm.

Company has managed its debt well and expected to remain under control at net debt/equity of 0.36 times FY25. We believe one should choose pro-growth companies like Prestige Estate for two years over the companies with capped valuation/growth like Oberoi Realty and DLF which have limited/no upside remaining.

We suggest switching from Oberoi Realty/DLF to Prestige Estate to capture an upside of 64% which includes a 35% premium to the current portfolio. We maintain Buy with an upgraded target of Rs 3,021/share.

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