Prestige Estate Projects
BSE SENSEX
28,413
Bloomberg
Equity Shares (m)
M.Cap.(INRb) / (USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
Avg Val, INRm
Free float (%)
S&P CNX
8,743
PEPL IN
375
69.0 / 1.1
225 / 130
-8/18/-24
47
30
15 September 2016
1Q4FY17 Results Update | Sector: Real Estate
CMP: INR184
TP: INR225 (+22%)
Buy
Muted presales led by weak market sentiment
Financials & Valuations (INR b)
2016 2017E 2018E
Y/E Mar
Net Sales
46.3
46.5
49.5
EBITDA
10.4
10.9
11.7
Adj PAT
3.5
3.5
3.7
Adj EPS (INR)
9.4
9.2
9.8
EPS Gr (%)
5.7
-1.3
6.2
BV/Sh(INR)
110.5 118.0 126.1
RoE (%)
8.8
8.1
8.0
RoCE (%)
6.8
6.4
6.4
Payout (%)
15.0
19.0
17.9
Div. Yield (%)
0.7
0.8
0.8
Weak P&L:
1QFY17 Consolidated P&L weakened sequentially with revenue at
INR9.5b (v/s INR9.6b QoQ), EBITDA at INR1.7b (OPM of 18.1%) v/s INR2.5b
(OPM of 26.4%) in 4Q and PAT at INR478m (v/s INR723m). Gearing marginally
went down by INR1b QoQ to INR55.8b (net DER of 1.13x).
Subnormal presales:
Quarterly pre-sales remained subdued at 0.8msf
(INR 5.1b) v/s 1.5msf (INR9.9b) in 4Q. Collections up 16%QoQ in 1Q. Leasing
and rental runrate was down 1Q, at 0.04msf and INR1.312b respectively.
Moderate growth outlook:
FY17 guidance comprises 15-25% growth in pre-
sales, 10% in collections, 30%-35% in rentals on the back of new completions,
and gearing at elevated level of 1-1.25x as capes cycle would continue.
Estimate change
TP change
Rating change
Quarterly Performance (Consolidated)
Valuation factors in weak phase of capital structure and operations:
PEPL remains
our preferred play on Bangalore real estate, which albeit lost momentum, still
offers better dynamics. But PEPL’s massive slippage over FY16 (contrary to track
record) highlights the magnitude of prevailing weakness in market. Post sharp
corrections, stock valuations factor in the concerns of deterioration in capital
structure and weakness in operations. At 1.7x/1.6x FY17/18E BV and at an EV of
10x FY18E EBITDA stock offers valuation comfort. Operational normalcy remains
near-term trigger. We maintain
Buy
with target price of INR225.
Total Revenue
Change (%)
Total Expenditure
EBITDA
As of % Sales
Depreciation
Interest
Other Income
PBT
Tax
Effective Tax Rate (%)
Reported PAT
Minority
Adj PAT
Change (%)
Presales (msf)
Presales (INR b)
Realization (INR/sf)
Leasing (msf)
E: MOSL Estimates
FY16
1Q
2Q
3Q
14,933 12,043 9,804
12,033
2,901
19.4
290
837
185
1,959
623
31.8
1,336
-189
1,146
0.8
5.3
6,583
0.1
9,332
2,710
22.5
378
882
268
1,719
622
36.2
1,097
-90
1,007
1.0
6.1
5,932
0.1
7,515
2,289
23.3
390
896
198
1,201
472
39.3
729
-93
636
0.9
5.1
5,667
0.2
4Q
9,563
8,869
2,524
26.4
526
973
187
1,211
425
35.1
786
-64
723
1.5
9.9
6,600
0.17
1Q
9,449
-36.7
7,743
1,706
18.1
336
790
265
845
141
34.0
704
-226
478
-58.3
0.8
5.1
6,216
0.04
FY17
FY16
FY17
2QE
3QE
4QE Consol Consol
10,942 12,586 13,564 46,344 46,540
-9.1
28.4
41.8
35.5
0.4
7,243 9,998 10,681 35,920 35,665
3,699 2,588 2,882 10,424 10,424
33.8
20.6
21.3
22.5
23.4
378
390
449 1,584 1,584
882
896
938 3,587 3,587
268
198
196
838
838
2,707 1,500 1,691 6,090 6,009
921
510
575 2,142 2,143
34.0
34.0
34.0
35.2
34.0
1,787
990 1,116 3,948 3,966
-90
-153
33
-436
-436
1,697
837 1,150 3,512 3,466
68.5
31.6
59.1
5.7
-1.3
0.9
1.4
2.0
4.1
5.1
5.9
9.4
14.6
26.4
35.0
6,556 6,714 7,375 6,434 6,840
0.1
0.1
0.2
0.5
0.4
(INR Million)
FY16 Var (%)
1QE
10,996
-14
-18.1
7,639
58
3,357
-49
30.5
367
872
176
2,294
-63
780
34.0
1,514
-53
-116
1,398
-66
8.6
1.1
7.1
6,455
0.1
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Abhishek Ghosh
(Abhishek.Ghosh@motilaloswal.com); +91 22 3982 5436
Aashumi Mehta
(Aashumi.Mehta@MotilalOswal.com); +91 22 6129 1537