Prestige Estates Projects surges 3% on robust revenue and profit growth in Q3

Leading real estate developer Prestige Estates Projects recorded a 3 percent rise in its share price in the opening trade on February 15. At 9:22am, shares of the company were trading at Rs 407.35, up 2.9 percent, on the BSE.

The company reported strong growth in revenue and net profit in the third quarter ended December 2022. Revenue from operations in Q3 stood at Rs 2,317 crore, a significant increase from the Rs 1327.5 crore a year back. The net profit has also surged to Rs 127.8 crore, compared to Rs 86.6 crore same period last year.

Operating margin, however, came in at 24.78 percent in the reporting quarter as against 27.46 percent last year.

Prestige Estate Projects has attributed its success to the sale of 2.91 million square feet of residential and commercial spaces with an average realisation of Rs 9,371 per sq ft for apartments, villas, and commercial sales, and Rs 4,148 per sq ft for plot sales.

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The company has also launched seven projects in Q3 of FY23, covering 4.06 million square feet. Prestige Group Chairman and Managing Director Irfan Razack stated that the company's primary focus is on timely execution, delivery, and customer satisfaction.

Razack also revealed that the company has planned significant launches in Bengaluru, Hyderabad, and Chennai for the upcoming quarter. He is confident that this will help the company exceed its annual guidance and continue to build sales momentum and collections.

The company’s sales guidance for FY23 is of Rs 12,000 crore. In FY22, the company did sales of worth Rs 10,400 crore. The company’s consolidated revenue from operations in the nine months ending December 2022 stood at Rs 5,683.2 crore.

In comparison to the 11 percent fall in share price of Prestige Estate Projects, shares of Sobha, DLF, Godrej Properties and Phoenix Mills have fallen over 5-9 percent in the past one month as against those of Oberoi Realty and Brigade Enterprises that have risen 1 and 10 percent. Nifty Realty has also dropped more than 6 percent.

“The Nifty realty index underperformed the market by 14ppt in 2022, despite strong housing sales, on rising rates. With the RBI rate hike cycle nearing an end, and sales still strong, we believe real estate stocks should outperform in 2023,” Jefferies had said in its report dated January 8.

The foreign brokerage firm continues to favour developers and among larger names and likes Godrej Properties and Lodha. Prestige Estates Projects is its mid-cap pick.

It had pointed out Prestige Estates Projects has taken advantage of the strong home market of Bengaluru to achieve the status of largest selling developer in FY22 and FY23, while adding that the company could see significant upside in valuations as the Mumbai pipeline on lease business builds up and residential developments get further in execution.

Prestige Estates Projects is a Bangalore-based developer of both commercial and residential space. It has followed the joint-development model of land acquisition to scale up.