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Elara Capital
Prestige Estate (Accumulate)
CMP: ₹197.05
Target: ₹235
Prestige Estates Projects reported revenue of ₹1,100 crore, down15 per cent y-o-y, affected by IND AS 115 implementation in Q1FY19. In absolute terms, EBITDA grew by 35 per cent y-o-y to ₹340 crore as projects booked (Kingfisher Tower & Royale) in Q3 were high margin in nature. Pre-sales was up 79 per cent y-o-y and down 17 per cent q-o-q to ₹940 crore (Prestige’s share), primarily aided by existing projects and continued momentum in Jindal City project launched in Q4FY18. Also, collections were steady at ₹930 crore, flat y-o-y. In Q3, Prestige launched 1.6 million sq.ft. of new projects at Bengaluru and Hyderabad. Rental income was up 14 per cent y-o-y at ₹187 crore, led by consolidation of Capitaland stake. Net debt was flat q-o-q to ₹7,600 crore.
Valuation: Prestige has scaled up its annuity income; however, a continued rise in net debt has been disappointing. Timely monetisation in the commercial segment over the next 12 months will be critical for debt reduction. At an EV of ₹15,000 crore, the firm offers a compelling value, given high visibility of annuity income (about ₹1,000 crore in FY20E). Adjusted for value of these assets, the development business and forthcoming leased portfolio are attractively valued at ₹5,000crore.
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