Target: ₹3,021
CMP: ₹1,794.05
Prestige Estates Projects (PEPL) has achieved the presales of ₹210bn for FY24 and guided ₹26,000-27,000 crore presales for FY25 on the back of a strong launch pipeline of ₹60,000 crore GDV and ₹12,000 crore ongoing inventory.
We valued the residential business at ₹27,300 crore. Company also plans to take its annuity multifold to ₹5,000 crore in next 2-3years, which we valued cumulatively at ₹41,000 crore at 11.7 per cent WACC and 8 per cent Cap rate for office (6.5 per cent for retail). As the company plans to list its hospitality arm, we valued it at ₹14,600 crore at 25x FY27 EV/EBITDA.
PEPL clearly stands out amongst peers with the superior growth prospects for residential segment, multifold annuity growth and value creation by listing the hospitality arm.
Company has managed its debt well and expected to remain under control at Net D/E of 0.36x FY25. We believe one should choose pro-growth companies like PEPL for 2years over the companies with capped valuation/growth like OBER & DLFU which have limited/no upside remaining.
We maintain Buy with an upgraded target of ₹3,021/share.