Bengaluru-based Prestige Estates Projects saw its net profit going up 30% in Q1FY24. The company’s stock price went up 62% in the last six months, reflecting investor interest in the company’s performance. The company is also looking to launch new luxury projects in Mumbai, Kozhikode and so on. In an interview, Irfan Razack, chairman and managing director of the company, tells Raghavendra Kamath about the company’s growth plans and outlook for the business.
What kind of incremental growth are you expecting in the festive season?
The festive season has always brought a surge in customer traffic across our projects, as home buyers find it an auspicious time to book their dream homes. We have lined up certain new launches in our key geographies of Bengaluru, Hyderabad, Mumbai and Chennai during the coming months, which should give us good growth impetus.
For FY24, PEPL expects to achieve 25% growth in annual pre-sales over FY23 to Rs 16,000 to Rs 18,000 crore. How do you plan to achieve this?
We have a healthy launch pipeline across the key cities we operate in. We have already launched a few large developments in Bengaluru in the July to September quarter which total up to over Rs 7,000 crore of lifetime potential sales value. There are further launches lined up, with a lifetime potential sales value totalling upwards of Rs 10,000 crore in the coming two quarters. We expect that we should be able to record a significant portion of these sales bookings within FY24. In addition to the above, we have had a consistently strong uptake in our ongoing developments in Mumbai, Hyderabad and other cities which will help us in achieving the projected pre-sales numbers.
What kind of growth are you looking at in sales bookings in next three years on a CAGR basis?
We are quite confident of our development pipeline and the performance of our brand. We also think that the real estate demand scenario is in an upswing and it will continue to complement the superlative economic growth of our country relative to the global economy. As long as jobs continue to get created in our key markets such as Bengaluru, Mumbai and Hyderabad, we see a healthy double-digit CAGR growth in the sales bookings in the coming two-three years.
Your net debt increased last quarter. Do you expect it to go up in coming quarters due to new acquisitions and launches?
On the back of successful launches and ongoing demand scenario, we have a very robust cash flow visibility from our residential projects pipeline. With the same, we should be able to largely fund new acquisitions and launches, shortfall if any shall be serviced through debt.
How have your recent launches fared?
Our recent launches in Bangalore – Prestige Lavender Fields at Varthur, Prestige Park Grove in Whitefield and Prestige Serenity Shores in Varthur, have received an overwhelming response from the customers. We have recorded sales in excess of our expectations and should be able to largely sell out these projects in FY24. The response to Prestige City Villas in Hyderabad and the pre-sales of Prestige Ocean Pearl in Calicut have also been very satisfactory. Therefore, we are quite assured of getting a good response for our upcoming launches as well.
What are your plans in commercial properties. Do you plan any new projects in the current financial year.
We are currently developing over 25 million sqft of new office space and this number will touch 40 million over the next 5 years
Consultants say office market is bearing the brunt of US issues. How has been your experience ?
There are some headwinds but given the huge push on manufacturing , IT services, healthcare and GCC’s we continue to see robust growth across many markets although the WFH story once changes to RTO ( return to office ) which has been the case lately it’s business as usual.
Since premium and luxury housing has picked up. Do you plan to increase share of such projects?
Residential prices have strengthened over the past couple of years across cities and product categories. In line with the increased pricing, customers are expecting more amenities and better specifications. Along side with the increased spending capacity of the families, we are seeing a desire of larger homes and shift towards 3 and 4 Bed apartments from 1 & 2 Bed Apartments. We are also planning more developments to take into account the changing customer preferences and therefore you shall see more premium developments from us in the coming quarters. Especially, in geographies such as Mumbai and Hyderabad, we aim to expand our footprint in the luxury housing segment.