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Prestige Estates Projects Ltd (PREG.BO)
Q2FY12: Topline Disappoints; Record Sales Bookings
Revenue drops 57% YoY — Revenue fell short of our estimates at ~Rs 1.3bn, down
57% YoY/48% QoQ- with Shantiniketan out and few projects not crossing the
recognition hurdle. EBITDA margins improved significantly to 38% (vs 28% in Q1/19%
in Q4FY11) given higher-margin revenue mix. Management expects margins to remain
in mid 30's going forward. PAT at Rs 263m declined 51% YoY/28% QOQ.
Record sales momentum — Strong sales in Q2- 2.1msf (Rs 7.8bn) sold versus
1.9msf sold in whole of FY11- on track to achieve Rs 15-16b FY12 sales guidance.
While traction in premium projects seems relatively slow, mid-income projects are
seeing robust bookings - 1.9msf sold in Q2. Also, company pre launched Sunny Side
(~0.7msf) – of the 395 units, 43 sold as at 30 Sept and >100 stand sold by 30 Oct.
Commercial holding up for now — Steady performance in Q2 - leased 0.7msf vs
~1.0msf in Q1; rentals remain steady. Management highlighted that impact of global
slowdown has not yet been felt - enquiries remain healthy. In fact it indicated that a few
large size transactions are in the pipeline and should close soon. In 1H, the company
has leased 1.7msf (vs FY12 guidance of 2.8-3.0msf).
Other key updates — (1) Unrecognized revenue of ~Rs 24bn, up by 44% QoQ
primarily on the back of good response to recent mid income housing launches, (2)
Bellavista (Chennai) and Mayberry (Bangalore) launch expected in Q3, (3) Added
~1.0msf of developable area spread across Bangalore, Chennai and Mysore and
further land bank in Bangalore and Goa, (4) Reduced cost of debt by ~65bps (13.6%).
Tweak Estimates, Maintain Buy — We cut our TP/Avg NAV to Rs 128/Rs 160 (vs Rs
133/166 earlier). Positive impact from land bank addition was more than set off by
moderation in execution schedule and increased net debt, customer advances.
However, our numbers could see some upside as we are yet to incorporate ~1.0msf of
new projects. Impressive operating momentum and attractive valuations – Maintain
Buy. Risks- Slowdown in IT/ITES, regulatory risks, slow execution.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Prestige Estates Projects Ltd (PREG.BO)
Q2FY12: Topline Disappoints; Record Sales Bookings
Revenue drops 57% YoY — Revenue fell short of our estimates at ~Rs 1.3bn, down
57% YoY/48% QoQ- with Shantiniketan out and few projects not crossing the
recognition hurdle. EBITDA margins improved significantly to 38% (vs 28% in Q1/19%
in Q4FY11) given higher-margin revenue mix. Management expects margins to remain
in mid 30's going forward. PAT at Rs 263m declined 51% YoY/28% QOQ.
Record sales momentum — Strong sales in Q2- 2.1msf (Rs 7.8bn) sold versus
1.9msf sold in whole of FY11- on track to achieve Rs 15-16b FY12 sales guidance.
While traction in premium projects seems relatively slow, mid-income projects are
seeing robust bookings - 1.9msf sold in Q2. Also, company pre launched Sunny Side
(~0.7msf) – of the 395 units, 43 sold as at 30 Sept and >100 stand sold by 30 Oct.
Commercial holding up for now — Steady performance in Q2 - leased 0.7msf vs
~1.0msf in Q1; rentals remain steady. Management highlighted that impact of global
slowdown has not yet been felt - enquiries remain healthy. In fact it indicated that a few
large size transactions are in the pipeline and should close soon. In 1H, the company
has leased 1.7msf (vs FY12 guidance of 2.8-3.0msf).
Other key updates — (1) Unrecognized revenue of ~Rs 24bn, up by 44% QoQ
primarily on the back of good response to recent mid income housing launches, (2)
Bellavista (Chennai) and Mayberry (Bangalore) launch expected in Q3, (3) Added
~1.0msf of developable area spread across Bangalore, Chennai and Mysore and
further land bank in Bangalore and Goa, (4) Reduced cost of debt by ~65bps (13.6%).
Tweak Estimates, Maintain Buy — We cut our TP/Avg NAV to Rs 128/Rs 160 (vs Rs
133/166 earlier). Positive impact from land bank addition was more than set off by
moderation in execution schedule and increased net debt, customer advances.
However, our numbers could see some upside as we are yet to incorporate ~1.0msf of
new projects. Impressive operating momentum and attractive valuations – Maintain
Buy. Risks- Slowdown in IT/ITES, regulatory risks, slow execution.
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