Q4FY19 pre-sales at `13.7 bn (Prestige’s share at `11.2 bn) was ahead of our estimate of `11 bn. Record pre-sales in FY19 – at `45.6 bn. Guided for 25-30% growth in FY20 with target pre-sales of `50-60 bn, new leasing of 2-2.5 msf (1.77msf in FY19) and exit rentals of ~`10 bn (`8.3 bn currently). Strong pre-sales target is driven by new launches of 10 msf and entry into Mumbai market.
With 10 msf of new launches planned in FY20 and under-construction annuity portfolio (revenue potential of `3.9 bn pa), both businesses (residential and annuity) will ramp up significantly over next few years. On such growth, Prestige warrants a rerating (despite its higher scale of operations, it trades at FY19 P/B of 2.6x 8.5x for Godrej). Debt levels will be capped despite the capex, alleviating leverage concerns. We have ‘Buy’ on the stock.
Guidance of 10 msf of launches in FY20. Most transactions are explored via JDA/JV model. Expect to spend between `7.5 bn and 10 bn in FY20 towards contribution to JVs or refundable deposits in JDAs.
Expects to close the year with 6-8 projects under the platform. No concrete plan to equity raise at the moment outside of strata sale of office projects to help fund part of capex. Expects good response to foray in Mumbai market with Byculla project in FY20 which will add momentum to pre-sales growth.
With 8.65 msf of unsold inventory worth `68 bn and `44 bn of pending costs, net cash of `65 bn is expected over 4-5 years. Collections at `12.4 bn and rental income at `1.95 bn; (2) Outflows: Total construction cost at `9 bn (`7 bn for residential projects and `2 bn for commercial capex). Expect steady state run-rate of `6-7 bn construction cost per quarter on development business and `1.5 bn per quarter for annuity capex.