Will Prestige Estates make it in Mumbai?

Prestige clocked its highest-ever quarterly collections of ₹2,431.6 crore, up 70% y-o-y. In the nine months ending December, sales and collections stood at ₹7,113 crore and ₹5,005 crore, respectively, representing a y-o-y increase of 97% and 51%.

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“The sales were backed by the great response to our newly launched projects Prestige Avalon, Aspen & Eden Park, Part of The Prestige City, Bengaluru, Prestige Beverly Hills, Hyderabad, and the existing inventories across geographies,” the company said. Prestige’s management is hopeful of further growth in sales bookings in 2022, with a launch pipeline of more than 15 million sq. feet.

In the last one year, shares of the company have rallied by 89%, comfortably beating benchmark index Nifty Realty, which rose nearly 55% in the same span. In March, Prestige said it concluded the deal with the Blackstone Group for sale of some of its assets to pare debt. This would be in two phases and the first phase is complete. The total enterprise value of this deal was around ₹9,160 crore.

At the end of Q2FY22, Prestige’s net debt-to-equity ratio stood at 0.43 times. The management has guided to bring this key parameter down to 0.15 times in H2FY22.

The residential real estate demand in Bengaluru and Hyderabad regions is strong. However, investors would keep a close tab on the company’s entry into the competitive Mumbai Metropolitan Region (MMR), analysts said.

In its Q2FY22 earnings conference call, Prestige had said that its first MMR project Jasdan Classic in Byculla is receiving good response and the launch of Prestige Cosmos in Mulund is likely to happen by Q4FY22. The company has projects lined-up in Pali Hill, Jeejamata Nagar, and Marine Lines in MMR.

“While MMR is a lucrative market, it is also one of the most difficult markets with unique real estate landscapes from land disputes and complex rules governing land use and development perspective. With aggressive geographic expansion into MMR, Prestige Estates’ next leg of growth is significantly dependent on its development partners,” analysts at Antique Stock Broking Ltd said in a report on 18 January. Commentary with respect to capital expenditure for new projects and the resultant increase in debt, if any, will be among key monitorables when Prestige announces its Q3 results. Prestige’s shares gave up some gains, closing about 3.5% higher on Tuesday.