Prestige Estate Projects launch pipeline supports pre-sales acceleration despite Q1 decline

Investment View and Valuation

Prabhudas Lilladher's July 31, 2026 result update on Prestige Estate Projects Ltd (PEPL) maintains a BUY rating and a target price of Rs 1,800 per share, compared with a CMP of Rs 1,595. The broker expects pre-sales to accelerate, supported by PEPL's approximately 40 million square feet launch pipeline, which has potential gross development value of Rs 450 billion across Bengaluru, Chennai, Mumbai, NCR and Hyderabad. Unsold inventory exceeds Rs 367 billion.

PEPL delivered a 32 per cent pre-sales CAGR over FY23-FY26, driven by new launches, entry into new markets and premiumisation. Prabhudas Lilladher expects pre-sales to grow at a 15-20 per cent CAGR over FY26-FY28E. Strong operating cash flow generation and a comfortable balance sheet are expected to support business development and capital expenditure.

The target remains based on a DCF-derived NAV using a sum-of-the-parts approach, incorporating a 20 per cent premium to gross NAV.

Q1 FY27 Financial and Operational Performance

Q1 FY27 operational performance was broadly in line with the broker's view. Consolidated revenue grew 16 per cent year-on-year to Rs 26,751 million, although limited project completions constrained revenue recognition. EBITDA declined 4 per cent year-on-year to Rs 8,596 million, while the EBITDA margin fell by approximately 661 basis points year-on-year to 32.1 per cent. Reported profit after tax declined 19 per cent year-on-year to Rs 2,359 million.

Revenue was 7.2 per cent below Prabhudas Lilladher's estimate, while EBITDA was 10.4 per cent above estimate and reported PAT was significantly above estimate.

The decline in pre-sales reflected a high Q1 FY26 base resulting from Indirapuram bookings. PEPL sold 6 million square feet during the quarter, of which its share was 5.6 million square feet. Average realisation declined 14 per cent year-on-year to Rs 10,893 per square foot, while collections increased 6 per cent year-on-year to Rs 48,100 million.

Launch Pipeline and Pre-sales Drivers

Golden Grove in Hyderabad was the largest Q1 FY27 pre-sales contributor, accounting for approximately Rs 30 billion, or 46 per cent, of bookings. Other contributors included Evergreen Raintree Park, The Prestige City Indirapuram, The Prestige City Mulund and Gardenia Estates Phase II.

New launches contributed Rs 35 billion, or 53 per cent, of quarterly pre-sales. PEPL launched three projects with approximately 16.5 million square feet of saleable area and potential gross development value of Rs 122 billion in Q1 FY27. It also launched the 2.93 million square feet Century Landmark commercial project in Bengaluru. Three projects totalling 4.37 million square feet were completed during the quarter.

Management Guidance and Balance Sheet

Management reiterated FY27 pre-sales growth guidance of 15-20 per cent and gross collection guidance of approximately Rs 250 billion, including residential collections of Rs 210-220 billion. Business-development spend guidance was maintained at approximately Rs 45 billion for FY27.

Management identified RERA approval delays, rather than demand, as the key risk to the pending Rs 450 billion launch pipeline. Net debt increased by Rs 10.1 billion quarter-on-quarter to Rs 119.2 billion following acquisitions in Versova, Borivali and Thane, Mumbai. These acquisitions have combined potential gross development value of Rs 178 billion.

Management expects approximately Rs 700 billion of unrecognised revenue to be recognised over about four years. This includes FY27 residential revenue guidance of Rs 110-120 billion. It also expects free cash flow of Rs 85-90 billion, which is intended to fund Rs 35-40 billion of capex and business development.

Commercial, Retail and Hospitality Performance

Commercial gross leasing stood at 1.5 million square feet in Q1 FY27, with FY27 exit rentals of Rs 8.65 billion. Retail gross turnover increased 18 per cent year-on-year to Rs 7.37 billion, while footfalls were 5.2 million.

Hospitality revenue was approximately Rs 3 billion, with a 41 per cent EBITDA margin and a Rs 419 million contribution to PAT.

Broker Estimate Revisions

Prabhudas Lilladher marginally reduced its FY27E and FY28E estimates as follows:

Key Risk

The principal risk identified by management is delay in obtaining RERA approvals, which could affect the timing of the pending Rs 450 billion launch pipeline. The broker's outlook nevertheless remains supported by the company's launch pipeline, operating cash flow generation and balance sheet position.