Prestige Estates Projects hits 52-week high; brokerages bullish on stock, raise target

Morgan Stanley has an overweight call on the stock and raised price target to Rs 347 from Rs 320 as Prestige is a strong real estate brand in South India with steady growth visibility.

Prestige Estates Projects shares gained nearly 2 percent intraday to hit a 52-week high of Rs 290.55 on May 29 after global brokerage houses retained bullish stance on the stock and raised price target following quarterly earnings.


The stock in last three-month has been one of the biggest gainers among midcaps, rising 40 percent. It was quoting at Rs 287.55, up to Rs 2.35, or 0.82 percent on the BSE at 1054 hours IST.

The Southern India-based real estate company reported a healthy 30 percent year-on-year growth in March quarter profit at Rs 139.1 crore on strong operating income. Revenue during the quarter grew 7 percent to Rs 1,979.3 crore YoY.

At an operating level, earnings before interest, tax, depreciation, and amortization (EBITDA) increased 31 percent to Rs 487.9 crore in Q4 with margin expansion of 448 bps YoY. Here is what brokerages say about results:

Brokerage: CLSA | Rating: Buy | Target: Rs 345 | Return: 21 percent

Prestige's Q4 was strong both operationally and financially as pre-sales surged to an 18-quarter high and profits more than doubled QoQ.

Management said that it is in the aggressive mode now as it looks to capitalize on a market upturn as well as industry-wide consolidation.

Pre-sales could rise 30 percent and lease income could grow 20 percent in FY20 if the upper end of guidance gets hit.

Deleveraging is also planned, but with capex continuing the same implies likely monetization of its lease assets. We maintain a buy and raised price target to Rs 345 from Rs 268.

Brokerage: Morgan Stanley | Rating: Overweight | Target: Rs 347 | Return: 22 percent

We have an overweight call on the stock and raised price target to Rs 347 from Rs 320 as Prestige is a strong real estate brand in South India with steady growth visibility.

Growth will be driven by new launches and scale-up in non-Bengaluru market.

Company is evolving into a quality rental play and we see its exit rentals rising to Rs 960 crore by FY20.

It has a good track record of adding new projects via joint development with landowners.

Disclaimer: The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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