Prestige Estate Projects Soars On Q3FY13 Results

Bangalore-based real estate company Prestige Estate Projects (PEPL) announced its Q3FY13 results post market hours yesterday (February 12, 2013). The financials posted by the company beat the street expectations. This was clear from the movement of the scrip in today’s trading session, which is up by 3.7%.

The net sales of the company increased twofold and stood at Rs 492 crore for Q3FY13. This was primarily boosted by the revenue recognition from a couple of its projects like Kingfisher Towers and Prestige Park View.

PEPL’s operating profits went up by 156% on a yearly basis to Rs 161.9 crore. The net profit too saw a twofold increase to Rs 92 crore from Rs 28 crore posted same quarter last year. Although there was a slight decline in the operating margins of the company by 110 basis points to 28.94% on a yearly basis, the net profit margin improved by 189 basis points to 18.71% in the same period. The reason for such a dichotomy lies in the rise in operating expenditure from 69.9% of sales in Q3FY12 to 71% in Q3FY13 and a fall in the interest burden from 9% of sales to 4.2% of sales in same period.

It is important to note that the company has already met its sales guidance of FY13 in the first 9 months of the current fiscal. Against the guidance of Rs 2500 crore for FY13, PEPL has already achieved sales of Rs 2580 crore in April-December 2012.

PEPL’s CMP stands at Rs 187, which discounts its TTM earnings by 27x. While this may look expensive, looking at the growth rate of the company we believe there is still room left for growth in the scrip.

We had recommended the scrip in DSIJ magazine (Vol. 28 Issue No. 1, dated December 30, 2012) as part of the recommendations in our Cover Story “Where to Invest”, when it was trading at Rs 179. The better results posted by the company reiterates our stance on the scrip, and therefore, we advise our readers to remain invested in the scrip with target of Rs 215 over the next one year.