Motilal Oswal Predicts 38% Jump for Prestige Estates: A Diversified Real Estate Play

Shares of Prestige Estates Projects Ltd. were trading over 2% higher on Friday, December 5, following a bullish recommendation from Motilal Oswal. The brokerage firm has reiterated its 'Buy' rating on the stock with a price target of ₹2,295 per share. This target signals a potential upside of 38% from Thursday's closing price.

Motilal Oswal notes that Prestige Estates has built a well-diversified portfolio across residential, office, retail, and hospitality sectors. The company's H1FY26 incremental business development of ₹33,100 crore, along with a launch pipeline of ₹77,000 crore, is expected to drive a strong presales CAGR of 40% over FY25-28, taking presales to ₹46,300 crore by FY28.

Prestige is also expanding its office and retail footprint to 50 million square feet (msf) while scaling its hospitality business. Motilal Oswal estimates that office and retail rental income will grow at a 53% CAGR to ₹2,510 crore by FY28, and hospitality revenue will increase at a 22% CAGR to ₹1,600 crore. As under-construction commercial assets become operational, total commercial income is projected to rise to ₹3,300 crore by FY30.

The brokerage added that Prestige has quickly gained market share in the Mumbai Metropolitan Region (MMR), made a strong entry into the National Capital Region (NCR), and is ramping up in Pune, creating additional revenue drivers. With growth accelerating across residential, commercial, and hospitality segments, Motilal Oswal believes the stock is well positioned for further re-rating.

Prestige Estates' net debt is expected to peak at ₹4,800 crore in FY27 as the company builds 50 msf of commercial assets and 15 hospitality properties. It is projected to generate a cumulative operating cash flow of ₹25,400 crore over FY26-28. Motilal Oswal expects annual investments of ₹5,000 crore in land acquisition and ₹2,500 crore in capex, resulting in a cash surplus of about ₹8,400 crore in FY28. Debt is likely to decline thereafter as rental income begins to rise with new commercial assets reaching optimal occupancy.

Overall, Motilal Oswal's positive outlook on Prestige Estates underscores the company's robust growth potential and diverse portfolio, making it an attractive investment opportunity for those looking to capitalize on the real estate sector's recovery and expansion.