On track to achieve FY15E guidance - Prestige Estates Projects :: HDFC Securities

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On track to achieve FY15E guidance
Prestige Estates Projects’ (PEPL) standalone 3QFY15
revenues of Rs 6.1bn were 6% below our estimate of
Rs 6.5bn owing to a couple of projects not hitting
revenue recognition during the quarter. However,
EBITDA margins were strong at 31% with APAT of Rs
1.0bn below estimated Rs 1.1bn owing to Rs 82mn of
tax payouts relating to earlier years. 3QFY15 gross
pre-sales were stable at 1.55msf worth Rs 10.1bn
even in the absence of any new launches during the
quarter. 3QFY15 collections (PEPL share) saw a 28%
YoY ramp up to Rs 7.6bn.
PEPL is poised to exceed its FY15E sales guidance of
Rs 50bn owing to a strong launch pipeline in the midincome
segment across South India in 4QFY15. We
expect PEPL to post strong growth in collections in
FY15E to Rs 30.0bn from Rs 24.8bn in FY14 and
expect rental income to grow to Rs 5.2bn by FY17E
from Rs 2.5bn in FY14. We maintain our BUY rating
with FY16E NAV of Rs 309/sh.
 Rental portfolio to grow over FY14-17E : We expect
PEPL’s FY14 rental income of ~Rs 2.5bn to increase to
Rs 5.2bn in FY17E on the back of number of malls
becoming operational and incremental leasing of office
space.
 We await clarity on fresh capex plans : PEPL continues
to invest in new land and is also incurring an annual
capex of Rs 5-6bn on annuity assets. On current project
pipeline, we expect PEPL to generate cash flow surplus
from FY17E onwards assuming no incremental capex.
However, we await clarity on PEPL’s fresh capex plans
for annuity assets and business development
initiatives.
 Focus on execution over FY15-16E : With PEPL having
launched ~39msf of developable area over FY12-14,
PEPL is now focusing on deliveries of ~30msf over
FY15-16E. PEPL’s ability to manage numerous launches
and execution will be pivotal to ramping up collections
over FY15-17E.

LINK
http://www.hdfcsec.com/Share-Market-Research/Research-Details/StockReports/3010890