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Shares of the country’s fifth largest listed real estate company by market capitalisation, Prestige Estates Projects (Prestige), soared nearly 9 per cent to a high of Rs 1,272 a share in Monday's intra-day trades on the BSE after the group secured funding for future projects. The stock ended the day with gains of just over 8 per cent to Rs 1,263.7.
The Prestige stock has more than doubled over the last six months (110 per cent), sharply outperforming its peer index, the Nifty Realty which logged gains of 63 per cent. The stock is up 3x over the last one year.
While strong pre-sales have led to gains over the last few quarters, the gains on Monday were on account of funding for new projects.
The company in an exchange filing said the Prestige Group has entered into a deal with Abu Dhabi Investment Authority (ADIA) and Kotak Alternate Investment Fund (AIF) for Rs 2,001 crore funding to capitalise on growth opportunities in the residential sector. They would develop projects with the gross development value (GDV) of Rs 18,000 crore across four Indian cities.
Highlighting the long-term significance of the partnership, Venkat K Narayana, Group CEO said, "Given the increasing demand and consolidation in the sector, this deal will help in accelerating growth and expansion. These funds will fuel the development of greenfield residential projects across the cities of Bengaluru, Mumbai, Goa, and NCR.”
In addition to the recent announcements, the strong pre-sales have helped the company maintain strong investor sentiment for the stock. Its bookings for the nine months ended FY24 were the highest across the major listed players.
The company booked sales of Rs 16,300 crore for this period as compared to Rs 9,000 crore for nine months ended FY23, registering a growth of 81 per cent. The sales booking for 9MFY24 surpassed the entire sales of FY23 by 26 per cent.
The company had launched 30 million square feet of new projects which accounted for 80 per cent of overall sales. Collections had also reached an all-time high of Rs 8,470 crore, registering a growth of 20 per cent year on year (Y-o-Y).
Kotak Institutional Research is constructive on the real estate sector and expects sales momentum to sustain going ahead, given multiple launches planned for 4QFY24 and FY2025. Prestige is among its preferred picks in the sector.
Recently, the company announced the launch of its new luxury residential project Prestige Somerville in Whitefield, Bangalore. The project comprises 306 apartments across two high-rise towers spread on 6.5 acres of land and has a revenue potential of Rs 800 crore.
To build up its pipeline, the company has been consolidating its holdings and adding new land parcels across the country. On Sunday, in an exchange filing, Prestige Estates Projects said it acquired a 50 per cent partnership interest in Prestige Realty Ventures for cash consideration of Rs 165 crore.
With this acquisition, the company now holds 99.90 per cent partnership interest in Prestige Realty Ventures. The latter has developed commercial building Prestige Techcloud and Hotel Moxy - Prestige Tech Cloud in Bengaluru.
The Prestige Group has also acquired 62.5 acres of prime land in Indirapuram Extension, NCR for building an integrated township 'The Prestige City' spanning over 10 million square feet and expanding its footprint in the National Capital Region (NCR). The acquisition was completed at a cost of Rs 468 crore.
Post the third quarter results, the company indicated that it had in the pipeline 53 million square feet, valued at Rs 42,000 crore, which translates with launch visibility spanning two financial periods. It also has an ongoing unsold inventory of Rs 16,000 crore. Brokerages believe that the company is on track to hit its FY24 sales guidance of Rs 20,000 crore.
In a report post the December quarter results, Pritesh Sheth and Sourabh Gilda of Motilal Oswal Research highlighted that a further rerating in the stock was imminent as the company enhances its growth visibility in its residential segment by expanding its project pipeline and advances on its key commercial projects. The brokerage has a buy rating on the stock with a target price of Rs 1,465.
