Prestige Estates Projects is the flagship company of the Prestige Group. The Prestige group has over 37 years of experience in real estate development and is one of the leading real estate developers in South India.
Prestige Estates Projects has completed 291 real estate projects, with a developable area of close to 176 mn sft as of Q3 FY24.
To put things in perspective :
- Macrotech Developers has completed 121 real estate projects, with a developable area of close to 96.6 mn sft as of Q3FY24.
- DLF has completed 158+ real estate projects, with a developable area of close to 340 mn sft as of Q3FY24.
- Godrej Properties has ~215 million sq. ft. of saleable area across India as of Q3FY24 and 41 million sq. ft. of real estate since FY 2018.
- Sobha has delivered an overall 133 mn sqft of developable area. Sobha has completed real estate projects measuring 70.33 mn sqft of developable area commensurate to 52.28 mn sqft of saleable area.
- Oberoi Realty has developed 9.5 mn sft as of Q1FY24
Prestige Estates Projects has developed a diversified portfolio of real estate projects focusing on the residential, commercial, hospitality, and retail segments. Additionally, they offer property management services, sub-leasing, and fit-out services.
FUN FACT: Prestige Estates Projects has a large land bank of 728 acres as of September 2023, which we believe is larger than that of other listed real estate giants. This can fuel future growth.
To give you some perspective, the company owns 728 acres of land, which is equivalent to 546 football fields.
For 9MFY24, the Prestige Estates Projects recorded revenue of Rs 5713 crores. The net profit stood at Rs 1393 crores an increase of 148% YOY. EBITDA grew to 55% due to improved productivity and better asset management.
Gaining traction across all verticals
In 9M FY2024, on a consolidated basis, sold an area of 16.13 million square feet (msf, 45% YoY growth) and reported pre-sales and collections of Rs. 16,333 crores (81% YoY growth) and Rs. 8,479 crores (20% YoY growth), respectively.
The revenue from the commercial office leasing increased by 54% YoY in H1 FY2024 while that from the retail segment grew by 348% in H1 FY2024, although on a lower base. The hospitality division reported a 13% YoY revenue increase in H1 FY2024 YoY, supported by a higher average room rent (ARR) and occupancy.
The numbers speak for themselves in terms of Prestige Estates Projects, as the real estate company has achieved margins of close to 30% over the past 5 years. They have also performed significantly better than their peers in terms of margins and have consistently maintained this exceptional performance.
BUSINESS OVERVIEW
Residential: Luxurious apartments, villas, and townships catering to discerning homebuyers. The co has completed 145 residential projects comprising a total area of 119 mn sq. ft. Prestige currently has 41 ongoing projects for 72 mn Sq ft and has 26 projects under the planning stage for 53 mn sqft.
Commercial: Office spaces, IT parks, and shopping malls aimed at fostering business ventures. The co has completed 121 office projects comprising a total area of 44 mn sq. ft. Under this segment, it currently has 11 ongoing projects for 20 mn Sq.ft and has 12 projects under the planning stage across 17 mn sqft.
Retail: High-end shopping destinations providing curated experiences for the discerning shopper. The co has completed 13 retail projects comprising a total area of 10 mn sq. ft. Under this segment, it currently has 1 ongoing project for 1 mn Sq. ft and 6 projects are under the planning stage with 6 mn sft.
Hospitality: The co. develops landmark hotels, resorts, spas and service apartments. The co has completed 10 projects comprising a total of 1489 keys. Under this segment, it currently has 3 ongoing projects of 955 keys and 3 projects are under planning comprising 525 keys.
Property Management Services: The company offers a variety of comprehensive services like facility, housekeeping, security, owner/tenant experience, and other property management-related services. The co has 180 Projects Under Maintenance comprising a total area of 115 mn sq. ft. Under this segment, it currently has 98 Projects in the pipeline.
REVENUE BREAKUP
EBITDA MARGINS (9MFY24)
GROWTH DRIVERS: INDUSTRY TAILWINDS
- Real Estate to grow ~2x faster than the Indian economy
- India’s Decade: Per capita incomes to grow 2x rate over 2021-31 compared to the previous decade 2011-21. Housing will be a key driver of GDP growth and a significant beneficiary.
- 100 mn new households to become ‘home ownership capable’ this decade
- Consolidating supply is unlikely to keep pace with accelerating demand, creating a lot of opportunities for Tier-1 developers- Assuming 15% supply CAGR, total production during the decade to be 8-9 million units vs. demand of ~100
million units. - Consolidation wave due to policy reforms, liquidity crisis, and Covid disruption led to:
60% reduction in developer count
Market share gains for listed developers – from 6% in FY17 to 17% in FY22
INVESTMENT RATIONALE
The future of Prestige Estates Projects appears bright, fueled by several factors:
Since the 2008 financial crisis, the Nifty real estate index has struggled to reach its all-time high and has lagged behind other sectors. However, there is growing optimism that the real estate sector could experience a significant rally in the coming decade. This optimism stems from various government schemes and infrastructure development initiatives that are expected to spur growth in the sector.
One company poised to benefit from this potential upswing is PRESTIGE ESTATES. With a solid track record and a reputation for professionalism, PRESTIGE ESTATES is well-positioned to capitalize on the anticipated growth in the real estate market.
About Author
