The stock price of Prestige Estates — the south-based real estate player — was down 6.2 per cent on Wednesday on the back of disappointing Q3 results and the likelihood of it missing FY16 targets on sales as well as launches. Its profit after tax, on standalone basis, was down 35 per cent at ₹64.9 crore in the December quarter compared to the corresponding quarter of the previous year.
Way behind target Total income fell 11.3 per cent at ₹645.2 crore. The management had a full-year sales target of ₹5,750-6,000 crore for the fiscal year 2015-16. However, for the nine months ended FY16, it managed to clock only ₹1,908 crore — or 33 per cent of the targeted annual sales. As regards launches, the company had plans to achieve 12 million square feet (mnsf) during the year. However, for the nine months ended FY16, it managed to launch just 3.83 mnsf — or 32 per cent of the targeted annual sales.
The management doesn’t expect to achieve the year-end target — which perhaps weighed heavily on the stock. It expects to achieve about half of the target — ending the year with sales in the range of ₹3,000-3,500 crore. In terms of new launches, it expects to do about two to three mnsf more in the current quarter — ending the year with a figure of about seven mnsf — or about 42 per cent lesser than the annual target. The management pointed out that a significant portion of sales (₹7,213 crore) is yet to be recognised in the books of accounts as such projects haven’t reached the threshold limit of 25 per cent completion.
Realisation dips The company’s average realisation — measured in terms of ₹/per square feet (psf) — fell below ₹6,000 levels — which in turn hit its financials. With the luxury segment witnessing a slowdown in sales, the company has been looking at the mid-income segment (78 per cent of overall residential sales) to boost sales. This had an impact on its average realisation — which fell to ₹5,889 a square feet for the December quarter as against ₹6,504 psf in the previous quarter.
The company gets bulk of its revenues from residential sales — about 72 per cent — while commercial and retail constitute 24 per cent and 4 per cent, respectively. In terms of geography, Bengaluru is the biggest market — constituting 80 per cent of its total developable area, followed by Hyderabad, Chennai, Mangaluru, Cochin and Ooty.