Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Prestige Estates Projects Ltd (BOM:533274, Financial) reported quarterly sales of INR3,030 crores, complemented by healthy collections of INR2,916 crores.
- The company sold 2.86 million square feet of area across 1,364 units with an increased average realization per square foot.
- Strong sales mix from key geographies: Bangalore (43%), Hyderabad (32%), and Mumbai (23%).
- Launched two new projects: Prestige Camden Gardens in North Bangalore and Prestige King's County in South Bangalore.
- High occupancy rates in retail spaces, with malls being 95%-97% occupied and strong trading performance in South Bangalore.
Negative Points
- Despite good sales, the top line appears low due to high inventory levels.
- Regulatory delays, such as the Code of Conduct during elections, impacted project approvals and launches.
- Significant debt in the residential segment, with INR4,500 crores out of INR8,200 crores of net debt.
- High CapEx requirements, with an estimated INR15,000 crores to INR16,000 crores needed for commercial, hospitality, and retail segments.
- Increased competition in the residential market, potentially impacting project signings and profitability.
Q & A Highlights
Highlights of Prestige Estates Projects Ltd (BOM:533274) Q1 FY25 Earnings Call
Q: Congratulations on the launches, but despite, you've been able to do sales of INR3,000 crores. So my next question is that for the rest of the year, we have a big task of growing 20%, 25% on the base of last year sales. So how do you think the launches will pan out for the three quarters? And largely in the second half, do you think that presales will see a significant pickup now?
A: Yes, it should and must. As it is, see, we've already finished off in July. And even in July, we've not had any launch. But hopefully, August and September, we should see at least three to four launches in Bangalore as well as in Mumbai. And that should prop up the numbers. There is a plan, NIM plan. I only hope the -- it's all about the regulatory stuff. As long as the regulatory falls in place, I think we should have a very strong quarter, the second quarter. And the third quarter will be quite big in that sense, because we also have NCR kicking in. We'll have some high-end projects in Mumbai as well as in Goa. So there is a lot of inventory that will come. There's a lot of -- it's not that there's any dearth of raw material. Raw material is there. It's all how it can be churned up, brought to the market. And the good news is the market is still very strong. Still there is demand. And still there is appetite and there is -- whatever we've launched gets consumed. Like we had talked about Camden Gardens, we launched that in the last quarter. It was like by the time we opened it, it was shut. It was sold and we are like got out of inventory. We launched just a part of King's County because we need it. We said let's sale this out properly. The first phase, whatever we launched, got sold out on day one and that's how we got the numbers for the June quarter. And let's strategize, let's see how things pan out. We are working on it. The teams are working on it. And I think we should have a robust '24.
Q: The second question on the fund ratio you have taken, enabling evolution for raising funds. So just wanted to get some sense on how are you looking to deploy these funds? And what will be the time period of deployment? Have you already identified some opportunities, growth opportunities, where you can start deploying it within this year? So what kind of growth pipeline do you think you can build with those funds?
A: See, that's a good question. It's all work in progress. First thing is we definitely have to identify what we're going to do when we're going to raise capital. First, the intend to raise capital is there. The teams are working on how to raise the capital and it's all work in progress, like we said. And it will be a mixed bag. It will be probably -- definitely some retirement of debt. And then also it will also be used for growth capital. So it will be a mixture of a whole lot of things. We can't keep funds either. But whenever they do come, whenever that does happen, there is a game plan for it. You will come to know as we go along.
Q: Okay. And just the last piece on the office and the retail market. So how are you seeing the lease momentum there, given that you have a large pipeline you're building out. So if you can also give some sense on how is the exit rental looking for FY25 and '26? So are you on track to achieve your rental guidance that you have been giving quarterly, so that you are on trend?
A: We will -- I think now in the last few quarters, we've been given segment-wise reporting also. If you look at the overall return on investment and other things, which we look at that. I think all segments as of today are performing very well. And retail, you asked me specifically retail. Whatever malls we have as of today are all 95% or 97% occupied. 2%, 3% is basically only to churn some -- get certain better brands. And the appetite is there in the retail space, where there's good trading that happens. Our store in South Bangalore is trading at more than INR100-plus crores per month, which is a good sign. And because most of the deals are linked to revenue share and the more the trading that happens, the more the revenue that comes to us. Having said that, if you ask me, our game plan to build mall is already in place. We started construction of two and moving on there need to start construction as and when the approvals fall in place. So these -- all these as per that 2028 number that we gave, the exit rental, we should and we will meet those numbers. There shouldn't be any problem on that.
Q: And any outlook on office market, sir? How is the office market looking like?
A: See, when COVID happened, the office market also we were a little skeptical. But the good part is office is also doing extremely well. The vacancy levels have gone down comfortably. And now it's 90%-plus occupancy is there, except for one or two new properties, which have just got ready. Those are work in progress. But I think in the next two quarters, even those should get filled up. So the vacancies are minimal. And whatever is coming up also, there are people who are interested in pre-leasing including, see, even Delhi, our Aerocity property by the time next year, we complete it. But we've already signed the lease, so that's a good point.
Q: So firstly, on your hospitality portfolio, which now is enhanced by another 1,200, 1,300-odd keys versus what you had disclosed last quarter, right? If you can give us some geographical mix in terms of where are these new keys coming up? And second, how that increases the revenue and profit potential from that segment? Because earlier we were expecting around INR2,600-odd crores of revenue from 3,000 odd keys that we had planned for. Right now, how it increases from here on.
A: See, you rightly said, we have got operating as of today 1,465 keys and that doesn't change. But under construction, what we have is 955 keys. And then that would be Aerocity property as well as we are doing a W Hotel (sic) [JW Hotel] in Bangalore North and the Aerocity is Delhi. And upcoming is what you asked for, where are these keys coming from? There are 2,942 keys that have been planned. We have various hotels in different geographies, including Mumbai and Mumbai just (inaudible) is one hotel coming up. And there are many others that are in the pipeline
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
