This realty stock has zoomed 104% since October; m-cap nears Rs 50,000 cr

Prestige Estates Projects hit a new high at Rs 1,231.95, up 6% in Thursday's intra-day trade and has surged 46% in past one month amid expectation of healthy demand.

Shares of Prestige Estates Projects hit a new high of Rs 1,231.95, as they rallied 6 per cent on the BSE in Thursday’s intra-day trade. In past one month, stock price of the realty firm has surged 46 per cent on expectations of healthy demand.

Since October, in past two-and-half months, the stock has more-than-doubled or zoomed 104 per cent from a level of Rs 602.60. A sharp surge in stock price of the company has led the market capitalisation (market cap) of Prestige Estates inch towards Rs 50,000 crore. The company’s market cap hit Rs 49,390 crore in intra-day trade today.

The strong rally in Prestige Estates’ scrip is also on back of a more than six-fold jump in second-quarter profit of the company, aided by a buoyant housing demand. The real estate developer's consolidated net profit rose to Rs 851 crore in the quarter ended September 30 (Q2FY24), from Rs 141 crore reported a year earlier. The group recorded highest-ever quarterly sales of Rs 7,093 crore, up 102 per cent during the quarter.

Moving ahead, the management said the company has robust pipeline of launches. A couple of projects in Mumbai in terms of Prestige Ocean Towers at Marine Line and Prestige North List at Worli. The Prestige Palawa Gardens at Chennai is also coming up for launch. The company launched one of the biggest projects in Hyderabad in the form of Prestige City Hyderabad. And it also has other developments launched in Hyderabad in the form of Kings County, the management said in Q2FY24 earnings call on November 8.

During the quarter, the company also had a high amount of spend on land acquisitions, close to Rs 847 crore overall. In that, major acquisition is the land that was bid and acquired in Hyderabad at Budvel, Rs 600 crore, and some other payments that were made for the land at Goa and one in Delhi and Prestige Falcon City, next phase of the development, the management said.

For FY24, Prestige Estates expects to achieve annual presales of around Rs 20,000 crore. It expects to achieve this on the back of a strong launch pipeline with a GDV of around Rs 49,400 crore. Prestige Ocean Towers (60 per cent economic interest) and Prestige Nautilus in MMR will be launched in H2FY24 with a total GDV potential of Rs 9,000 crore. It will launch its first project in NCR, Prestige Bougainvillea Gardens in H2FY24 with a saleable area of 3.1msf.

Analysts at HDFC Securities maintain BUY rating on the stock, to factor in better-than-expected realisation/presales and improving visibility on office assets with the financial closure of the BKC project. However, the stock is trading above its target price of Rs 908 per share.

The brokerage firm Motilal Oswal Financial Services remains positive on the company’s pre-sales growth trajectory and resultant cash flows from the residential business. While the increase in net debt remains a concern in the near term, the brokerage firm believes the ramp-up in cash flows beyond FY25 will allay leverage concerns.