Prestige Group's Q2 sales booking up 9% at Rs 1,123 cr despite slowdown

 Realty firm Prestige Estates Projects' sales bookings rose 9 per cent year-on-year to Rs 1,123.3 crore during September quarter on better demand for its residential properties despite the COVID-19 pandemic.

The Bengaluru-based real estate developer had reported a sales booking of Rs 1,026.3 crore in the year-ago period.

According to a company's investors presentation, Prestige Group's sales booking in the first six months of 2020-21 declined to Rs 1,584.4 crore from Rs 2,042.5 crore in the corresponding period of the previous year.

Housing sales were badly affected during April-June because of the national lockdown, which was imposed to curb the spread of the coronavirus disease.

According to PropTiger.com, housing sales in eight major cities fell 54 per cent year-on-year in January-September 2020 to 1,23,725 units.

The demand has been gradually improving from July onwards, especially for those players who have a better track record of executing real estate projects on time.

During April-September period, Prestige Group launched three new residential projects.

Its rental income from leased commercial assets stood at Rs 404 crore in the first half of this fiscal year, the presentation said.

Prestige Group's net debt stood at Rs 8,667.6 crore at the end of the second quarter with an average borrowing cost of 9.65 per cent.

In a bid to reduce its debt significantly, Prestige Group is selling a large portfolio of its commercial assets -- office, shopping malls and hotels -- to global investment firm Blackstone for over Rs 9,000 crore.

The term sheets between the two parties have already been signed and the deal is likely to be concluded next month.

Prestige Estates Projects recently reported 40 per cent fall in consolidated net profit at Rs 93.8 crore for the quarter ended September. It had posted a net profit of Rs 157.2 crore in the year-ago period.

Total income stood at Rs 1,916.7 crore in the second quarter of this financial year as against Rs 1,962.7 crore in the year-ago period.

Prestige Group has so far completed 247 projects covering 134 million sq ft area.

In housing segment, the company has completed 118 projects and is currently developing 30 more projects.

Prestige has completed 36 million sq ft of office space and 15 million sq ft area is under construction. In shopping mall segment, it has completed 7 million sq ft and is building another 3 million sq ft area.

In hotel business, Prestige has 1,262 keys and is developing 1,229 keys.

Prestige Estates signs deal with Blackstone for stake sale in firm's assets

Real estate player Prestige Estates has signed a deal with private equity major Blackstone Group for stake sale in some of the company’s commercial, retail and hotel properties.

Though Prestige has not disclosed the deal amount, the US-based PE fund manager could buy the company's assets worth $2 billion (over Rs 14,000 crore).

According to a NSE filing, Prestige Estates has signed a non-binding letter of intent with Blackstone and the transactions will be consummated through a combination of primary investments, secondary transactions, joint ventures or such other modes, as may be mutually agreed between the parties.

While Blackstone is looking to acquire 20 million sq ft of commercial space, including 16 million sq ft of ready and completely leased assets of Prestige Estates, Business Standard had reported that the company is planning to build twice the amount of commercial property space it is looking to sell to the global fund manager.

Prestige Estates is looking to sell the assets to reduce debt and generate liquidity via the Blackstone deal.

Blackstone is the largest office owner in the country, with real estate assets worth $20 billion in the country. It has joint ventures with Panchshil Realty, K Raheja Corp, Salarpuria Sattva, among others.

Blackstone's two joint ventures with Embassy group and K Raheja Corp have floated real estate investment trusts or REITs in the country. Its another JV with Panchshil Realty is gearing up for a REIT, reports said.

Prestige Estates up 10% as arm acquires 50% stake in Lokhandwala DB Realty

Shares of Prestige Estates Projects moved higher by 10 per cent to Rs 413 on the BSE on Monday, in an otherwise weak market, after the company's wholly owned subsidiary acquired 50 per cent stake in Lokhandwala DB Realty LLP. The stock of the Bengaluru-based real estate developer was trading at its all-time high level.

“Prestige Falcon Realty Ventures -- wholly owned subsidiary of Prestige Estates Projects -- has invested in Lokhandwala DB Realty LLP by way of capital account contribution and has been admitted as partner of the LLP with 50 per cent economic and voting rights,” the company said in exchange filing. 

That apart, the company has received shareholders approval to raise funds via qualified institutional placement (QIP). The shareholders have also approved to issue and allot 13.44 million equity shares at Rs 325 per share to GAMNAT Pte. The Singapore sovereign wealth fund GIC Pte already owns about 16.33 million shares, or a 4.36 per cent stake in the company. 

Prestige Estates has a presence across commercial, residential, retail and hospitality segments. It also offers property management services.

At 11:28 am, it was trading 9 per cent higher at Rs 408 on the BSE, as against a 0.48 per cent decline in the benchmark S&P BSE Sensex index. The trading volumes on the counter more than doubled with a combined 1.1 million shares changed hands on the NSE and BSE so far. In the past eight trading days, the stock has zoomed 32 per cent, as compared to a 2.5 per cent rise in the Sensex.

Prestige Estates, Polycab India hit 52-week high in subdued market

Shares of Prestige Estates and Polycab India hit their respective 52-week highs on Tuesday in an otherwise weak market. These stocks were trading higher in the range of 3 per cent to 7 per cent, as compared to around half a per cent decline in the S&P BSE Sensex in the afternoon deals.

Shares of Prestige Estates Projects, the real estate developer, were up for the fifth straight trading day, up 7 per cent at Rs 345 on Tuesday on optimisation of the strong pipeline of rental assets yielding growth in rentable income. The stock was trading close to its all-time high of Rs 356, touched on January 2018.

Prestige Estates had reported a strong set of numbers for July-September quarter (Q2FY20), with profit before tax (PBT) jumping 50 per cent year-on-year (YoY) to Rs 230 crore. Revenue grew 48 per cent to Rs 1,923 crore and EBITDA margin expanded by 350 basis points (bps) to 31.7 per cent YoY.

“We remain optimistic on Prestige Estates considering its attractive valuation, which is supported by a strong portfolio of operational rental assets, thereby reducing the risks associated with residential segment, and a planned increase in commercial and retail properties over the next five to seven years,” analysts at Nirmal Bang Equities said in a result update.

Despite an encouraging quarter on collections and pre-sales, Prestige Estates has seen further debt built up, posing a challenge for the management in achieving optimal leverage (target D/E of 1.4 by FY20E). One of the few positives is that around 64 per cent of debt is backed either by annuity or by rental securitisation/ bill discounting. The company continues to look at opportunities for monetization of its retail/hospitality assets and update on the same (expected in 3QFY20) would provide a re-rating trigger, said analysts at HDFC Securities.

Meanwhile, Polycab India hit a new high of Rs 967, up 3 per cent, surging 43 per cent in the past two months on the back of strong Q2 results. The stock of the fast moving electric goods (FMEG) company surpassed its previous high of Rs 956 touched on November 22, in the intra-day trade.

In Q2FY20, Polycab’s net profit more-than-doubled to Rs 194 crore, on the back of strong revenue growth. It had logged profit of Rs 90 crore in the year-ago quarter. The bottom-line got an additional boost on the back of lower tax rates due to re-measuring of deferred tax assets/liabilities. The company’s revenue during the quarter grew 24 per cent YoY to Rs 2,242 crore, driven by strong growth across segments.

Brokerage firm Sharekhan maintains ‘positive’ view on Polycab India with a potential upside of 12-15 per cent. The cables and wires segment is expected to outpace the industry’s growth rate of 14-15 per cent, led by increasing distribution reach and diverse product and sector applications.

The FMEG segment is expected to maintain strong revenue growth trajectory, led by leveraging distribution strength and launch of new products within existing categories. Rising cash flows with each passing year may lead to upward revision in capital expenditure along with probability of higher shareholder returns through dividends, the brokerage firm said in a client note.