Will Prestige Estates in Mumbai Succeed?

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Shares of Bengaluru-based Prestige Estates Projects Ltd surged nearly 8% on the day on the NSE to reach a 52-week high. R554.90 on Tuesday. Investors welcomed the property developer’s December quarter sales (FY22 third quarter), which rose by 111% year-over-year (y-o-y) to R4267.60 crore Rs.

Prestige recorded its highest ever quarterly collection of R2,431.6 crore, up 70% YoY. In the nine months to December, sales and collections stabilized R7113 crore rupees and R5,005 crore, respectively, representing year-on-year increases of 97% and 51%.

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“Sales were supported by significant response to our newly launched projects Prestige Avalon, Aspen & Eden Park, part of The Prestige City, Bengaluru, Prestige Beverly Hills, Hyderabad, and existing stocks across geographies,” the company said. He hopes to drive further growth in sales bookings in 2022, with the launch of a pipeline of more than 15 million square feet.

In the past year, the company’s shares are up 89%, comfortably outperforming the benchmark Nifty Realty index, which is up about 55% in the same period. In March, Prestige said it entered into the deal with Blackstone Group to sell some of its assets to clear debt. This will be in two phases and the first phase is complete. The total project value for this transaction was about R9,160 crores.

At the end of the second quarter of fiscal year 22, Prestige’s net debt-to-equity ratio was 0.43 times. Management directed a reduction of this base factor to 0.15 times in H2FY22.

The demand for residential properties in Bengaluru and Hyderabad districts is strong. However, analysts said investors will remain close to the company’s entry into the competitive metropolitan Mumbai (MMR) region.

In its Q2 FY22 earnings conference call, Prestige said its first MMR project Jasdan Classic in Picula is receiving a good response and Prestige Cosmos will likely launch in Mulund by Q4 FY22. The company has matrix projects in Pali Hill and Jeejamata Nagar and Marine Lines in MMR.

“While MMR is a lucrative market, it is also one of the toughest with a unique real estate landscape of land disputes, complex rules governing land use and a development perspective. With the massive geographical expansion In MMR, the next phase of growth for Prestige Estates is highly dependent on its development partners.In debt, if any, will be among the key elements to watch when Prestige reports its third-quarter results.Prestige shares gave up some gains, to close higher. by 3.5% on Tuesday.

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