Prestige Estates Projects' (PEPL) profit declined by 99% YoY to Rs16mn and EBITDA declined by 17% YoY despite EBITDA margin increasing by 18bps to 34.5%. Revenue declined by 17% YoY to Rs12,737mn. Decline in profit is mainly due to: (1) Rise in interest expenses by 2% YoY (2) Decline in other income by 21% YoY (3) In 1QFY20, the company had booked an extraordinary item of Rs380nmn relating to fair value gain arising out of acquiring balance 51% stake in Babji Realtors Private Limited from various JV partners/shareholders. Such an extraordinary gain was not there in 1QFY21. The net debt-to-equity ratio improved to 1.50x in 1QFY21 from 1.86x in 1QFY20. The improvement in the ratio is primarily attributable to issue of equity of Rs8,995mn during 4QFY20 through QIP and private...

Maintain BUY We maintain BUY on PEPL with SOTP of Rs 280/sh. We have decreased our FY21/22E EPS estimates by 40%/31% to factor in protracted recovery from COVID-19 related slowdown in sales velocity as well as construction, and delayed launches. PEPL pre-COVID re-rating was backed by robust expansionary plans on asset build out and likely de-leveraging through REIT. New business development initiatives in Mumbai market and stake purchase in DIAL hotel in Delhi was being looked at geographical diversification. COVID-19 puts spanner in the wheel and we believe its time for PEPL to refine capital allocation and restrict high exposure to hospitality and Mumbai premium/office projects. As such FY21E residential collections will remain subdued and headwinds like work from home & retail footfall/hotel occupancy normalization will take time. Nonetheless PEPL remain well placed to tide over near term weakness with timely fund raise of Rs9bn during 4QFY20 and likely pre REIT placement in FY21E.

Prestige Estates Projects' (PEPL) profit declined by 89% YoY to Rs154mn despite EBITDA growth of 2.4% YoY. Revenue remained flat on YoY basis at Rs19,823mn. Decline in profit is mainly due to rise in interest expenses by 30% YoY. Although a part of rise in interest expenses is attributable to implementation of IndAS 116, even on a pre IndAS 116 basis the profit declined by 54% YoY. The net debt-to-equity ratio improved to 1.46x in 4QFY20 from 1.75x in 4QFY19. The improvement in the ratio is primarily attributable to issue of equity of Rs8,995mn during the quarter through QIP and private placements. Net debt rose from Rs75,817mn in 4QFY19 to Rs81,743mn in 4QFY20. We have maintained Buy rating on the stock with a revised target price (TP) of Rs254 (earlier Rs259),...

PEPL is going all out (1) On building lease assets & (2) Increasing Non-South exposure with JV/JD tie ups. It's banking on the consolidation theme and picking up distressed projects in non-south markets. Large capex outlays on new lease assets will be cash flow dilutive over next 3-4yrs and requires timely funding from existing lease assets monetization and deployment of capital in cash flow dilutive under construction projects. Office assets under construction/upcoming launches of 15/25mn sqft are aggressive with overall office portfolio expected to increase from 10mn sqft to 50mn sqft over next 5-6yrs. We retain NEU with increased (new leases addition) TP of Rs 358/sh. We maintain NEU on PEPL with SOTP of Rs 358/sh (vs. Rs 348/sh earlier). We have increased our FY20/21E EPS estimates by 35%/18.9% to factor in better than expected deliveries in residential projects. PEPL posted strong 3QFY20 results.

Prestige Estates Projects' (PEPL) profit grew by 179% YoY to Rs1.6bn and revenue grew by 155% YoY to Rs26,809mn. Revenue growth in 3QFY20 was driven by: (1) Higher growth in residential revenue and (2) Increase in annuity income by 25% YoY to Rs2,337mn. However, we are concerned about: (1) Rising net debt of the company. The net debt increased from Rs7,565 crore in 3QFY19 to Rs8,674 crore in 3QFY20. The company's net debt to equity ratio rose to 1.86x in 3QFY20 compared to 1.79x in 3QFY19. (2) Declining cash collections. (3) Falling EBITDA margin. We have maintained Buy rating on the stock with a revised target price (TP) of Rs445 (earlier Rs399). The rationale behind our optimism for reducing the discount to 10% is the strong pipeline of rental assets...

Prestige Estates Projects' (PEPL) profit growth of 64% YoY to Rs1.5bn was driven by: (1) Revenue growth of 48% and (2) EBITDA margin expansion of 350bps YoY to 31.7%. Revenue of Rs19,229mn in 2QFY20 was up 48% YoY and was driven by: (1) Increase in PEPL's share of commercial leasable area by 6% YoY to 8.94mn sq. ft. (2) Increase in PEPL's share of retail leasable area by 32% YoY to 3.40mn sq. ft. (3) Rental income rising by 23% YoY to Rs2,229mn....

Prestige Estates Projects' (PEPL) profit growth of 64% YoY to Rs1.5bn was driven by: (1) Revenue growth of 48% and (2) EBITDA margin expansion of 350bps YoY to 31.7%. Revenue of Rs19,229mn in 2QFY20 was up 48% YoY and was driven by: (1) Increase in PEPL's share of commercial leasable area by 6% YoY to 8.94mn sq. ft. (2) Increase in PEPL's share of retail leasable area by 32% YoY to 3.40mn sq. ft. (3) Rental income rising by 23% YoY to Rs2,229mn....

Prestige Estates Projects' (PEPL) 1QFY20 result increases our concerns over rising net debt of the company. The company's net debt to equity rose to 1.86x in 1QFY20. PEPL has reported a net profit of Rs1,153mn for 1QFY20, down 5.2% YoY and 17.1% QoQ. Residential sales volume at 1.21mn sqft decreased by 42% QoQ but increased by 9% YoY. Average realization at Rs7,119/sqft increased by 32% QoQ and 3% YoY. Rental income at Rs2,062mn increased by 5% QoQ and 12% YoY. EBITDA margin expanded by 455bps YoY and 965bps QoQ to 34.3%. We have...

Despite an encouraging quarter on collections, PEPL has seen further debt built up (due to asset portfolio stake consolidation), posing a challenge for the management in achieving optimal leverage. Further pending capex includes Rs 13bn/4-5bn for Office and Retail/ Hospitality respectively. One of the few positives is that ~60% of debt is backed either by annuity or by rental securitization/ bill discounting. Launches were largely tilted towards commercial projects. Asset stake sale is key for further re-rating. Retain NEU with Rs 286/sh TP. We maintain NEU on Prestige Estate (PEPL) owing to muted presales, increasing debt and limited visibility on asset monetization. Our SOTP based TP is Rs 286/sh. We remain constructive on leasing business and cap rate compression in declining interest rate scenario will cap valuation downside.

Despite strong pre- sales, Prestige has seen debt building up. Further pending capex includes Rs 15/3bn for Office and Retail/ Hospitality respectively. With ~Rs 7.5-10bn outlay expected over the next 12-15 months on JDAs/ JVs, we remain concerned. The only solace is ~56% of debt is backed either by annuity or by rental securitization/ bill discounting. The stock has run up 39% over the past 3 months. Maintain NEU with TP of Rs 286/sh. Key risks (1) Further increase in debt, (2) Delays in asset monetization, (3) High unsold inventory We maintain NEU owing to rich valuations. Our SOTP based TP stands reduced to Rs 286/sh (vs Rs 292 earlier). We have reduced FY20/21E EPS by 27/17% to factor in higher depreciation on asset capex and higher financing costs.

Prestige Estates Projects or PEPL reported a net profit of Rs1,391mn in 4QFY19, up 30% YoY and 139% QoQ. Residential sales volume at 2.08mn sqft increased from 1.21mn sqft in 3QFY19 and 1.55mn sqft in 4QFY18. However, average realisation declined sharply to Rs5,395/sqft from Rs6,763/sqft in 4QFY18 and Rs 7,742/sqft in 3QFY19. Rental income at Rs 1,958mn increased 4% on QoQ basis and 25% on YoY basis. We have valued PEPL at a discount of 20% (25% earlier) to FY21E NAV based on: 1) Concerns relating to closure of funding which is essential for completion of its planned commercial and retail projects. 2) Rising debt leading to an increase in interest expenses, thereby negatively impacting earnings. 3) Subdued residential real estate market and cost pressure, especially interest...

Monetisation of completed inventory of ~Rs 28bn remains key. We maintain BUY with Rs 292/sh TP. 3QFY19 Revenue came in at Rs 10.8bn, Rs 1bn lower due to IND AS 115. Margins came in at 31.9% (vs 20.0/27.7% YoY/QoQ). PEPL had deliveries of 7mn sqft in 3QFY19 alone (record deliveries of ~24mn sqft in 9MFY19, 141% ahead of full year guidance) leading to total unrecognized revenue of ~130bn, incl. ~Rs 75bn of earlier reversals (re-recognition over 2.5-3 years).

Prestige Estates Projects or PEPL reported a net profit of Rs 674mn in 3QFY19, down 32.1% YoY and 24.1% QoQ. Residential sales volume at 1.21mn sqft increased from 0.78mn sqft in 3QFY18. Average realisation increased to Rs7,590/sqft from Rs6,869/sqft in 3QFY18 and Rs 6,104/sqft in 2QFY19. Rental income at Rs1,874mn increased 3% on QoQ basis and 14% on YoY basis. Earnings declined 32.1% on YoY basis on account of: 1) Lower revenues at Rs10,776mn, down 15.3% YoY. 2) Higher employee benefit expenses at Rs1,023mn, up 46.6% YoY. 3) Increase in other expenses by 139.7% YoY. 4) Increase in finance costs by 106.7% YoY. Earnings declined 34.1% QoQ because of: a) Decrease in revenues by 18.5% QoQ. b) Decrease in other income by 36.0% QoQ. We have retained Buy rating on PEPL and retained our target priceof Rs256...

We maintain BUY with Rs 309/sh TP PEPL reported 2QFY19 revenue of Rs 13.2bn, 49% ahead of estimates. APAT came in at Rs 968mn (234% ahead of estimates). Impact of IND AS 115: higher revenue by Rs ~1.3bn and higher net profit by Rs 543mn. PEPL delivered 12.1mn sqft in 2QFY19 alone (~17.1mn sqft in 1HFY19, which is 71% ahead of guidance and this has resulted in strong revenue recognition).

Due to the recent price correction, we upgrade PEPL from NEU to BUY with a NAV-based TP of Rs 316/sh. 1QFY19 Revenue came in at Rs 8.6bn. The prior quarters are not comparable due to 1st time adoption of IND AS 115. Impact (1QFY19): Lower revenue by Rs 1.7bn and higher net profit by Rs 23mn). Even as 1mn sqft was launched in 1QFY19 in Chennai and Bangalore, PEPLs share of pre-sales decreased QoQ to 1.1mn sqft (vs 1.6mn sqft QoQ).

Prestige Estates Projects or PEPL reported a net profit of Rs1,304mn in 1QFY19, up 9.5% YoY and 12.8% QoQ. Revenues stood at Rs8,613mn, down 32.7% YoY and 53.4% QoQ. Residential sales at 1.11mn sqft in 1QFY19 declined sequentially from 1.55mn sqft, but were significantly higher than 0.69mn sqft in 1QFY18. Rental income at Rs1,838mn increased 24% YoY and 17% QoQ. Despite the decline in revenues, earnings grew on account of: 1) Higher other income at Rs389mn, up 152.6% QoQ and 39.9% YoY. 2) Exceptional gain of Rs894mn arising from acquiring control on previously held interest in jointly-controlled entities. 3) Low tax expense leading to a lower effective tax rate at 22.4%. We have retained Buy rating on PEPL with a target price of Rs363. We will revise our estimates...

Robust pre-sales; debt rises on stake buyback Prestige Estates (PEPL) reported robust operations as company benefitted from projects launched in 4QFY18. Pre-sales volume was at 1.11msf and sales value at INR 7.6bn (+69% YoY) during the quarter. Completed inventory declined by 0.67msf during the quarter (60% of sales). Collection from residential segment was reported at INR 7.5bn (vs. INR 8.0bn quarterly average). PEPL has shifted to completion method of accounting under Ind AS 115. Net debt increased by INR 8.2bn to INR 72.8bn primarily on CapitaLand stake acquisition (INR 3.4bn) and consolidation of INR 2.8bn debt related to the acquisition. While the increase in...

Strong Revenue Growth, But Fall In Margins Raises Concerns Prestige Estates Projects or PEPL reported a net profit of Rs1,156mn for 4QFY18, up 16.5% YoY and 1.8% QoQ. Revenues stood at Rs18,486mn, up 28% YoY and 45.3% QoQ. Residential sales were strong at 1.55mn sqft in 4QFY18, an increase of 99% QoQ and 112% YoY. Rental income at Rs1,570 mn also increased 6% YoY and 13% QoQ. However, we are concerned about: 1) Margin compression PEPL reported EBITDA margin of 18.1% for 4QFY18, down 70bps YoY and 190bps QoQ. 2) Rise in interest costs from Rs869mn in 4QFY17 and Rs867mn in 3QFY18 to...

We initiate coverage on Prestige Estates Projects (PEPL) with a Buy rating. Our optimism is driven by its strategy focused on increasing the portfolio of rental assets both commercial and retail. PEPL has an impressive array of 9.2mn sqft of rental assets in FY18 which is expected to increase to 26.6mn sqft by FY24E. An expected sharp rise in commercial and retail portfolio amid a reducing vacancy rate and likely rise in rental rates will help cash flow in the medium to long term and partially mitigate the concerns arising from continued weakness in the residential segment. We derive 86% of our net asset value or NAV from retail and commercial assets. We have arrived at a target price of Rs363 for PEPL, implying an upside of 25% from the current market price....

Q3FY18 reported revenue grew by 3% YoY, while PAT grew by 34% due to higher realisation. Given Bangalores better affordability compared to peers (Mumbai/NCR), we continue to maintain a positive view on Bangalore-based developer PEPL....