Prestige Estates Projects : With a market cap of ₹ 53,659 Cr, Prestige Estates Projects holds a prominent note, with its innovation, and strategic expansion. Over the past three decades, Prestige has transformed from a regional builder into a national behemoth, leaving a mark on the urban landscape. 

After the announcement of the quarterly results of Prestige Estates Projects, the stock saw an increase of 11% in just two days. The current market price of the stock now stands at Rs 1,321.25.Prestige Estate Projects Limited stock gave a stellar return of 190.82% in just one year. The company has a leadership position in Bengaluru with a presence in multiple cities in India. 

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This article delves into the heart of Prestige Estates Projects, exploring its business overview, segment analysis, growth trajectory, financial health, and promising future within the ever-evolving real estate symphony.

Prestige Estates Projects

Business Overview

Founded in 1986 by Razack Sattar, and started their journey in southern India,  Prestige Estates Projects has evolved into a multifaceted real estate giant. Its diverse portfolio encompasses

Residential: Luxurious apartments, villas, and townships catering to discerning homebuyers.

Commercial: Office spaces, IT parks, and shopping malls aimed at fostering business ventures.

Retail: High-end shopping destinations providing curated experiences for the discerning shopper.

Hospitality: Five-star hotels and resorts under the “The Residence” brand, offer opulent escapes.

Property Management Services:  The company offers a variety of comprehensive services like facility, housekeeping, security, owner/tenant experience, and other property management-related services. 

With over 288 completed projects encompassing a developable area of 172 million square feet and 56 ongoing projects spanning 86 million square feet, Prestige boasts a formidable presence across India. Its geographical reach extends to 13 cities including some of the big cities like Bangalore, Chennai, Hyderabad, and Mumbai, as well as promising tier-II cities like Mangalore and Goa, Kochi, Calicut, and Ooty. 

Let’s understand the revenue contribution of the various segments of the Prestige Estates Projects to get a clear picture of their contribution to the total revenue of the company.

Prestige Estates ProjectsBusiness Segment

Prestige Estates Projects comprises different segments. it’s a symphony of revenue streams, with each segment playing a distinct but integral part in the overall financial success. Understanding the contribution of each section is crucial for appreciating the company’s multifaceted strength.

Revenue contribution (in crores)

Segments FY 23 FY22 FY21
Residential₹6,149.4 (74%)₹5032.2 (79%)₹5507.5 (76%)
Commercia₹638.8 (8%519.4 (8%)₹1016.4 (14%)
Hospitality₹660.5 (8%)₹186.6 (3%)₹104.3 (1%)
Property Management services₹799.3 (9%)₹597.7 (9%)₹444.7 (6%)
Retail₹72 (1%)₹53.6 (1%)₹191.5 (3%)

From the data above, we can see that the majority of the revenue of the Prestige Estates Projects comes from the construction of Residential buildings. The hospitality sector of the company has been seeing an increase in its revenue contribution.  Festivals, the wedding season, and the increase in foreign inbound travel and MICE (Meetings, Incentives, Conferences, and Exhibitions) activities have contributed to the rising demand. 

Possible reasons for the growth of Prestige Estates Projects

The Indian real estate sector is on an upswing, fueled by urbanization, rising disposable incomes, and government initiatives. This growth wave has been a boon for Prestige Estates Projects, witnessing:

  • Increased demand: Growing demand for both residential and commercial spaces, particularly in key metros, has benefited Prestige’s diverse portfolio. As per Q2 FY24, Prestige currently has 24 upcoming projects for residential and 11 upcoming projects for commercial segment.
  • Positive industry outlook: The anticipated continued growth of the Indian real estate sector bodes well for Prestige’s prospects. Through a consultation paper, the Securities and Exchange Board of India (SEBI) has explored the idea of regulating fractional ownership of real estate assets, a step that could potentially introduce a framework similar to Real Estate Investment Trusts (REITs), allowing individual investors to seek ownership of prime assets. 

Furthermore, the National Stock Exchange (NSE) has made a commendable move by including REITs and Infrastructure Investment Trusts (InvITs) in prominent indexes such as the NIFTY 500, NIFTY Midcap 150, and NIFTY Smallcap 25. This action encourages involvement from small investors, adding to India’s real estate boom story.

  • Technology adoption: Embracing prop-tech advancements for project management, sales, and customer engagement has boosted efficiency and competitiveness.
  • Strong financial performance: Consistently surpassing market expectations and delivering strong financial results has instilled investor confidence with the revenue exceeding Rs 8300 crores in FY23 and a consistent record of profitability.

These factors have converged to create a positive outlook for Prestige, also resulting in the upward price movement of the stock of the company. 

Prestige Estates Projects – Financial

For FY23, the company recorded revenue of Rs 8,772 crores, an increase of 33% YOY. The net profit of the company stood at Rs 1,066.8 crores. EBITDA grew 45.81% y-o-y on account of improved productivity and better asset management.

The ROCE of the company saw a decrease of 19% to 9.74% in FY23 from 12.01% in FY22. The ROE of the company has also reduced due to higher exceptional items recognised in the previous year resulting in higher return on equity ROE for FY23 stood at 5.22% as compared to 16.01% in FY22.

The share price of the Prestige Estates Projects has also seen an increasing trend in the last few years. From being as low as Rs 139.40 in May 2020 i.e. during the COVID era, to now at Rs 1324. The stock has given a massive return of about  849.78% in the last 5 years.

Future Outlook

The future of Prestige Estates Projects appears bright, fueled by several factors:

The company has an ambitious portfolio expansion. With over 43 projects encompassing 85 million square feet currently in the pipeline, Prestige Estates Projects is poised for significant and sustained growth. This geographical reach, extending across key metros and promising Tier-II cities, underscores Prestige’s vision for national prominence.

Prestige’s unwavering commitment to quality, innovation, and strategic expansion, coupled with its solid financial foundation, positions the company for continued success and growth. The company recently launched ‘Prestige Park Grove’ which contributed ₹4600+ Cr of Sales in Q2 of FY24. 

Prestige has acquired 24 acres of land in Hyderabad with a development potential of 8 million square feet, with a sales potential of ₹6500 Cr .Beyond mere construction, Prestige Estates Projects recognizes the imperative of sustainability. Its focus on embracing green technologies and adopting eco-friendly practices aligns perfectly with contemporary market trends and societal expectations. 

Sustainable construction methods, energy-efficient systems, and a commitment to environmental preservation – these are the notes that resonate with discerning investors and environmentally conscious homebuyers alike, strengthening the company’s brand image and solidifying its position as a leader in responsible development.

Conclusion

In conclusion, Prestige Estates Projects emerges as a stalwart in India’s real estate landscape, orchestrating a symphony of success. With a rich legacy since its inception in 1986, the company has transformed into a national giant, leaving a mark on the urban canvas. Showcasing a stellar financial performance, including a substantial YoY revenue increase of 33% in FY23, Prestige Estates Projects stands as a beacon of resilience in the dynamic real estate sector.

 The company’s strategic vision, robust business segments, and commitment to innovation position it for sustained growth. As it diversifies into hospitality, retail, and sustainable practices, Prestige Estates Projects not only adapts to market trends but also leads with a responsible and forward-looking approach. What are your thoughts on this company? Do let us know your views in the comment section below!

Written by Akshita Maloo

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