Prestige Estates Projects Limited (PRESTIGE.NS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Prestige Estates Q3 FY '26 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Pritesh Sheth. Thank you, and over to you, sir.

Yes. Thank you. Good afternoon, everyone. Apologies for the delay. On behalf of Axis Capital, I welcome everyone to the call. From the management of Prestige Estates, we have Mr. Irfan Razack, Chairman and Managing Director; Mr. Zayd Noaman, Executive Director; and Mr. Amit Mor, the Chief Financial Officer. I'll now hand over the call to management for their initial remarks, and then we can open the floor for question and answer. Thank you. Over to you.

Good afternoon, everyone. I'll ask Zayd to give his opening remarks, and then we'll continue with questions.

Thank you. Good afternoon, everybody, and thank you for joining us on today's earnings call for the third quarter and 9 months ending FY '26. I'll begin with a brief overview of our operational and financial performance, followed by updates across our residential, office, retail and ESG platforms, after which we will open the floor for questions. Q3 and the first 9 months of this financial year have been defining periods for the company, marked by strong execution, healthy demand visibility and continued diversification across geographies and asset classes. Starting with our residential business, we recorded presales of INR 4,184 crores during Q3, reflecting a 39% year-on-year growth. For the 9-month period, presales stood at INR 22,327 crores. This is a growth of 122% year-on-year. Importantly, this is the highest sales ever achieved by the company and exceeds our previous full year peak sales, all within just 9 months. This year, the performance indicates strong resilience of our portfolio across markets and depth of demand for well-located high-quality developments. Sales volumes for the quarter stood at 2.99 million square feet, taking cumulative sales for the 9 months to 16.95 million square feet with over 8,500 units sold year-to-date. Our geographic mix remains well diversified, led by Mumbai, Bangalore, Hyderabad and NCR, providing resilience across market cycles. Average realizations improved to INR 14,459 a square foot, up 6% year-on-year, while our plotted developments continue to see strong traction with realizations increasing by over 30%. Collections remained robust, reflecting the quality of sales and disciplined cash flow. We achieved collections of INR 4,548 crores in Q3 and INR 13,283 crores over the 9-month period, the highest collections recorded by the company and higher than full year totals in the past. On the supply side, during Q3, we launched 5.02 million square feet, taking total launches for the 9 months to 23.83 million square feet with a residential GDV of over INR 19,600 crores. Completion during the quarter stood at 4.72 million square feet and 12.71 million square feet for the 9-month period, reflecting steady progress and disciplined execution across projects. Moving to our commercial office portfolio. Leasing during Q3 stood at 0.56 million square feet with occupancy across the operating portfolio remaining strong at over 95%. Exit rentals from the office portfolio for FY '26 are expected to be approximately INR 829 crores. With completion of our ongoing pipeline, office annuity income is projected to scale to around INR 4,000 crores by FY '30. We also recently completed Prestige Lakeshore Drive, Prestige Tech Hub and Prestige Capital Square in Bangalore, premium office developments totaling 3.7 million square feet, which will shortly begin contributing meaningfully to our annuity income. Our portfolio continues to perform consistently well. During Q3, mall footfall stood at 5.2 million and gross turnover grew 14% year-on-year to INR 702 crores. Occupancy across malls remains exceptionally strong at over 99%. Exit rentals for FY '26 are expected to be around INR 275 crores and with 14 malls in the pipeline, retail annuity income is projected to scale to approximately INR 1,175 crores by FY '30. Turning to the financial performance. Revenues for Q3 stood at INR 3,886 crores, up 128% year-on-year with EBITDA at INR 873 crores and PAT at INR 245 crores. EBITDA margin for the quarter stood at 22.5%. For the 9-month period, revenues were INR 9,052 crores, EBITDA at INR 3,104 crores and PAT at INR 1,015 crores, reflecting healthy profitability and operating leverage. EBITDA margins for the 9 months stood at 34.3%. It's also pertinent to note that our unrecognized revenue as of December 31, 2025, stood at INR 61,922 crores, providing strong visibility for revenue recognition over the coming few years. Finally, on ESG, we continue to make steady progress across environmental, social and governance parameters. Key highlights include India's first net zero energy operational mall at Forum South Bangalore, multiple LEED IGBC and WELL certifications across our portfolio, progress under our Prestige Green Promise with a commitment of 1 million saplings and plantations underway and several national safety awards across residential, commercial and retail projects. Overall, our performance in Q3 and the first 9 months of FY '26 reflects the strength of our diversified platform, disciplined capital allocation and focus on execution. We remain confident about sustaining momentum while continuing to scale our annuity portfolio and delivering long-term value to all stakeholders. With that, I will now open the floor to questions.

Thank you, Zayd. Well done.

[Operator Instructions] The first question is from the line of Akash Gupta form Nomura.

Am I audible?

Yes, sir. You're audible.

Congratulations on a good performance. My first question is on the margins for this quarter at roughly 22%. What was the reason behind that? And second is also on the cash flows, I think the investment in land, the outflow of cash this year was -- this quarter was also on the higher side at INR 27 billion. What was the reason behind that? That's my first question.

Yes. The margin reduction was mainly because of the product mix. If you see last quarter, we had a couple of projects where the margin was slightly higher. In the current quarter, there were a couple of projects where the margins were in the single digit. Basically, if you see, we completed one project during the year called Prestige Siesta, wherein there were legacy customers whom we have sold at -- it's an NCLT takeover, so it was a old rate. So the margin in that block was lower. So that has resulted in a lower margin for the quarter.

Okay. And the outflow of cash this quarter on the investment in land at roughly INR 27 billion, that was also on the higher side. So what was the reason behind that?

Yes. So basically, this quarter, we had a couple of good opportunities, especially on the bidding and some corporate deals. So one land parcel we had tied up in Hyderabad called the Knowledge Park. There we have invested close to INR 1,000 crores, okay? And then in the Chennai market, we have picked up one land for INR 800 crores. So these 2 are the major contributors. But otherwise, the total deployment was close to INR 2,700 crores.

Understood. My second question is on the launch pipeline for fourth quarter. And how should we think about your presales number in FY '27? So it's fairly certain, I think that we will achieve our FY '26 guidance. How are we thinking about demand and launches, the big launches in FY '27?

Now this current quarter, we've got 3 launches coming in Bangalore. One we've already done, which is Evergreen at the Prestige Raintree Park. In the pipeline is Eaton Park and Fernvale in the Prestige City, 2 more components, where the approval will come in hand in a couple of days, and then we'll get RERA and will get launched this quarter. We also have a plotted development called the Prestige Marigold in Bangalore. And then Hyderabad, we are very confident of launching 2 developments. One is the Rock Cliff and which is in Banjara Hills. And the second is the Golden Grove. Golden Grove, again, that is in Tellapur. It's a very large development. And there, again, we believe we'll be able to launch this quarter. So all in all, we should cross top line sales in this quarter of about INR 8,000 crores, which will take us through to INR 30,000 crores for the year, if not more.

Understood, sir. And how should we think about FY '27 and your thoughts on the real estate demand, please?

The demand continues. For FY '27, it's all work-in-progress. We have a pipeline. I think it's too early for us just now to spell out the -- all the projects that are there, which -- of course, the list is there, but it's all work-in-progress in the sense which project in this quarter. And I believe that once the product comes to the market, it will definitely be sold.

The next question is from the line of Parikshit Kandpal from HDFC Securities.

Congratulations on a good quarter. Sir, if I look at your numbers for FY '26, you will cross or reach INR 30,000 crores. But a large component, almost 1/3 is coming from NCR, so which is INR 9,000 crores, which was a hit product this year. But we start FY '27 at least a shortfall of INR 9,000 crores and to reach or achieve or exceed INR 30,000 crores, some other products have to contribute. So how does one think in FY '27, how do you intend to make up because NCR, we don't have much of a pipeline as of now?

No, no, there is a pipeline. The teams are working on it. There is a strategy, and we have tied up some land in NCR also. We can't be just one product vendor in the NCR. We have tied up 2 large tracks in the Gurgaon region, which will spell out as we go along.

In terms of -- so I don't see that in the business development pipeline, GDV addition. So how much will be the value of the GDV added in these 2 projects?

So if you just look at the Slide #26 in our investor presentation, that tells you the GDV of new acquisitions. That's totaling to around INR 40,000 crores. And if you look at existing pipeline that we already have where approvals are nearly finalized and planned for upcoming quarters, we have about 16 projects there, of which 1, 2, 3, 4, 5, 6 projects should get launched this quarter. That balance is around about -- how much, Amit?

Around INR 15,000 crores...

About INR 15,000 crores will be there over there as well. So INR 15,000 crores plus [indiscernible] INR 40,000 crores.

That I was referring more from the NCR, which you finally touched upon that you have tied up some land parcels. So...

NCR, we already have Sector 150, which the legal issue, which was there, has been cleared and the plan should get approved in a couple of months. And that will come for the next financial year. That's why we haven't planned it for this quarter. But for sure, in the next quarter, that will come. We've got -- I can't spell out the other 2 sectors in Gurgaon, which we have finalized. We have a term sheet. We are working on the legal due diligence, and that will surely hit in the next financial year. They are something that at the appropriate time, it will be announced.

But in terms of GDV, sir, how much will be the value of these 2 projects in Gurgaon?

If you take that, it will be again a bigger, if not as big as what we've already done in Indirapuram. So the deal will be more than INR 10,000, all 3 put together.

Okay. All put together. All put together will be about INR 10,000 crores.

More than INR 10,000 crores.

Okay. Secondly, on commercial, I think you have on the television spoken about the commercial assets earlier a few days back. Just wanted an update on the BKC and the Mahalaxmi assets. So how has been the lease traction in these 2 assets? So what kind of preleasing we have already achieved into these 2 assets?

Yes. So what happens is now in BKC, the good news is the construction is underway at a pretty fast pace, and we should top out the X tower in BKC by April, May of this year. And we should top out the Ys tower by August, September in this particular calendar year. And similarly, for the Turf Tower, which is the Mahalaxmi, which is called the Prestige, both the towers should get topped out by the end of the year, that is December. So we are -- things are moving at a very, very healthy pace. And then, of course, after we top off, there will be a lot of work in terms of finishing, which will take another year. But having said all that, if you ask me on preleasing, I think the teams have worked really well. And in BKC, we have commitments, firm commitments with deposit for about 1.4 million square feet of office leasing. Similarly, in the Turf Tower, we would have around 400,000 square feet of pre-leased commitments. That is for property that is under construction, which I would say is a great achievement. Once it's ready, the demand will be much more because the type of products that we're going to deliver will be not seen...

Okay. And just lastly on the data center, I think you signed some MOU with the Maharashtra government. Any update on that? So what are you exactly planning to do there? And what kind of investments you should look into the data center ground?

Yes. So that's a work-in-progress. The land will be allocated to us. So we're just waiting for that to be done. Hopefully, at the end of this quarter, we should have a further update on that.

Okay. But we are looking to do build-to-suit or will it be....

It will be a combination because it's close to 100 acres. So it will be a complete build-out and it will be completely master plan. So we'll be open to doing either or...

Just lastly, if I may squeeze in. So next year, FY '27, I mean, I think in your media interview today, you said that we intend to better off FY '27. So -- but are we looking at any growth? Or you think that INR 30,000 crores will be kind of a peak number at least for the near to midterm in terms of presales?

For FY '27, see, obviously arrive at our number for FY '26. We hopefully, we are, I think, more or less sure to cross that INR 30,000 crores mark. We will take stock. We'll take fresh start. And I think once you are at the peak, I think we need to evaluate, do all our homework and work out from which market, what -- like you yourself asked about the NCR market. So we are looking at seeing which markets, how much can come from. But I believe the INR 30,000 crores mark itself, what we're going to reach is going to be pretty high. We'll give a guidance when we come to April in the next quarter when we have our conference, maybe we'll have our guidance also ready. As of today, it's too early for me to say anything.

The next question is from the line of Karan Khanna from AMBIT Capital.

Just a couple of questions from my side. Firstly, Mr. Razack, you spoke about INR 30,000 crores of presales for FY '26, which effectively means about INR 7,000 crores, INR 7,500 crores in the fourth quarter. If I look at the launch pipeline, so largely all the 4 projects are in Bangalore. And if I look at the quarterly sustenance sales of about INR 3,200 crores, INR 3,300 crores, effectively, you're looking at a 50%, 60% kind of a sale on the launch of these projects. So if you can provide some color on the health of the Bangalore real estate market, what's the sales that you're getting on ground in terms of footfalls and conversions that should take you comfortably to the INR 30,000 crore mark?

That's the reason why I said we will cross it quite comfortably. We just launched in this month, the Evergreen at Prestige Raintree Park, which is a INR 5,000 crore GDV, out of which it has met with a really, really good response. In the first 2 weeks itself, we have done fairly good sales, I think almost about INR 1,500 crores to INR 2,000 crores, of course, will total up as that sales stabilize. And I think this quarter on that particular project should do very well. Now we also have the Prestige City 2 components, Eaton Park and Fernvale. Even those, we believe that once the approval comes in hand, which is likely to happen this week or early -- I mean, early next week and the RERA, we should be able to get a fairly decent sellout, like you said, 50%, 60%. And we have a large development in Hyderabad, which again is going to contribute very big, which is the Golden Grove in Tellapur. So all this put together, we should cross the line very, very comfortably. There won't be any struggles.

Palm Court in Chennai.

Palm Court in Chennai. Palm Court also just got approved in Chennai. But Chennai market -- see, now looking at markets, I'll tell you, Bangalore is still pretty busy, it's very good. It's fast. Hyderabad is also fairly decent. Chennai is steady, very steady, and it will not give me instant results, but depends on which micro market, the demand is still there because of the brand itself.

Sure. This is helpful. Secondly, on new BD, can you provide some color on what IRRs are you penciling in while signing up new business development? And for the INR 40,000 crores, which was signed so far in 9 months FY '26, what does the margin look like? And in the last call, you mentioned you're looking to sign one large BD in Mumbai. So if you can provide an update on that?

I think I'll ask Amit to answer this.

The IRR, what we are expecting on our recently signed projects is in the range of around 20% to 30%. So most of the projects are in that range itself. So if you see a blended rate for our upcoming and our ongoing projects also, it's in that range. So it will be -- we'll be maintaining that margin levels.

And the BD that you're looking at in Mumbai, if there's any update that you are seeing here?

See, BD is a work-in-progress. Every day, there's something new that's happened. Now see, the biggest BD in Mumbai is we already have the land, which is the -- and we cleaned it up. And very hopefully, in the next financial year, we launch, which is the Prestige Place, which is Jijamata. The entire 4,000 homes, which were there, have been cleaned up. First is our responsibility to build 4,041 homes. Second is as soon as the plans and the concepts are almost getting finalized, where we are going to have a hotel, we are having office, we are having a retail mall plus 2.5 million square feet of residential. And I believe that should be a big number mover. And that also will happen in the next financial year. We are also having a large office development, which we are going to sell in Bandra that is called the LIG, which we call it the Business Bay. Even that approval will come in the first quarter of next year in Mumbai. So the BD is -- many things are happening. Everything can't be spelled out, but there is a lot of traction and there is a lot of opportunity. We -- like you see now you saw Hyderabad, we bought that 11-acre land in HITEC City, out of which 3 million square feet will be built, 2 million will be office, 1 million will be residential. The residential tower will give us at least INR 2,500 crores GDV, and I believe that will be a luxury tower and that there is a vacuum for that type of a product. I think that will also meet with a good response.

The next question is from the line of Parvez Qazi from Nuvama Group.

So my first question is on the DIAL project at the Delhi Airport. It would be great to get some status update about that.

Yes. What about the DIAL project?

I mean time lines and how is the...

Okay. Now that's good news is that the teams are really putting a lot of focus. First is the 600,000 square feet of office that we have, has been almost all fully leased out and the customers are waiting to move in for their results. And the project itself, I would say the completion of the hotel block will be by July of this year. And of course, there will -- since it's a very large hotel and a lot of rooms, there will be some simulation times 4 to 5 months. We've already appointed the general managers for both the hotels that is the St. Regis and Marriott Marquis, the huge convention. So I believe the hotel per se should start trading at a soft launch end of this calendar year. And the office component, we should be able to hand it over to the tenants in April as soon as we get the occupancy certificate.

Sure. And second, on the housing side, I mean, you did give a color about the various markets like Bangalore is still good, Chennai, exceeding. I wanted to get your views on price increase. I mean is there a scope for further price increases? Or do you think we are more or less near the top?

No, I think we've topped up on the price. We should not allow the price you see. Now what's happened is what components go into price? It is, a, the raw material, which is land; b, it is the cost of construction; and c, the approval cost, these 3, like it varies from city to city. Mumbai, more than the land cost, which is the approval cost because the premiums and the TDRs and the other components are pretty huge. Like in Hyderabad and Bangalore, the approval cost is not that high. But then we have to be very, very careful on what we commit and we don't overcommit, overpay and overprice the land. Once you pay too higher price of land, then in case the market corrects itself or there's no demand at a certain level, there is going to be pain. But as of now, at the level that we reached, I think we -- according to me, more or less peaked out, we should not allow prices to rise more than this.

Sure. And one last question for Amit. For the BD deals that we have already entered, what is the pending land CapEx that needs to...