1 PRESTIGE share price target reports by brokerages below. See what is analyst's view on PRESTIGE share price forecast, rating, estimates, valuation and prediction behind the target. You may use these research report forecasts for long-term to medium term for your investment or trades in 2020.
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 maintained Buy rating on the stock with a target price (TP) of Rs341 (from Rs256 earlier), up 31% from the current market price.
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 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 costs, which are expected to impact the residential segment’s cash flow. The rationale behind upgrading the target price by valuing at a 20% discount instead of 25% is the strong pipeline of rental assets yielding growth in rentable income. We have retained Buy rating on the stock with a target price of Rs341 (from Rs256 earlier), up 20% from the current market price.
We have valued PEPL at a 25% discount to FY21E NAV. We have given a discount of 25% because of: 1) Concerns relating to closure of additional 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 reducing realisation from residential sales. 4) Rising concerns over residential segment’s cash flow given the high debt. We remain optimistic on PEPL considering its attractive valuation which is supported by a strong portfolio of operational rental assets, thereby reducing the risks associated with residential segment, and a planned increase in commercial and retail properties over the next five to seven years. Further, we have not included 33mn sqft of land bank in our valuation.
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). With 1.6mn sqft launched in 3QFY19, PEPL’s 9MFY19 launches stand at 3.2mn sqft across Bengaluru, Chennai and Hyderabad (vs 10mn sqft guidance for FY19E). Pre sales (PEPL’s share) continued to stand out at ~1.2mn sqft in 3QFY19 (+55% YoY, led by Jindal City – 16% share in pre-sales). With PEPL not looking at any private deal for its annuity portfolio (after the GIC deal fell through in 2QFY19), it might look to either tap the capital markets or look for a 25% stake sale. Capex intensity is expected to remain high (Rs 1.5-1.8bn/quarter). Monetisation of completed inventory of ~Rs 28bn remains key. We maintain BUY with Rs 292/sh TP.
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
DISCLAIMER: Information is provided "as is" and solely for informational purposes, not for trading purposes or advice, and may be delayed. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and FrontPage will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein.