Nomura Bullish on Prestige Estates: A Pan-India Player with Strong Growth Potential
Global brokerage Nomura has initiated coverage on Prestige Estates Projects with a ‘Buy’ rating and a target price of ₹1,900, which implies a 16.9 per cent upside from Tuesday’s close at ₹1,624.7 per share. The brokerage believes the company is “doing all things right” and transforming itself into a pan-India player, while building a solid annuity-plus-hotel portfolio.
At 9:53 AM, Prestige Estates share price was trading 0.34 per cent higher at ₹1630.25 per share. In comparison, BSE Sensex was up 0.29 per cent at 82,623.09. Year-to-date (Y-T-D), Prestige Estates shares have slipped 3.5 per cent, as compared to the Sensex’s rise of 4 per cent.
### Why is Nomura Bullish on Prestige Estates Projects?
#### Pan-India Strategy, Stronger Scale in Mumbai & NCR Nomura’s analysis shows that Prestige Estates’ pan-India growth strategy is superior to peers, and a strong scale-up is likely, particularly in Mumbai and the Delhi National Capital Region (NCR), driven by both mid-income township and luxury projects. The company has also guided for FY26E pre-sales of ₹25,000–27,000 crore, but brokerages expect the developer to surpass estimates with pre-sales of about ₹29,000 crore (70 per cent year-on-year (Y-o-Y)), 10 per cent higher than guidance.
The company delivered ₹12,100 crore of pre-sales in Q1FY26 alone, and has a launch pipeline of 29 million sq. ft. (msf) with a Gross Development Value (GDV) of ₹29,900 crore in the remaining nine months. Even if only 70–80 per cent of the launch target is achieved, pre-sales from launches could generate ₹9,000–11,000 crore, on top of ₹20,000 crore of available inventory.
#### Execution to Drive Annuity and Hotels Ebitda 4–5x Superior execution will help scale Prestige Estates’ annuity and hotel Earnings before interest, tax, depreciation and amortisation (Ebitda) 4-5x over the next 4-5 years, according to Nomura. In the commercial segment, the company expects exit rentals to grow from ₹820 crore in FY26 to ₹385 crore by FY30E. Of this, the brokerage estimates ₹2,200 crore will come from assets in BKC and Mahalaxmi, where the company had a strong start to preleasing.
In the hotel segment, the management expects scope to expand from 1,200 rooms in FY25 to 2,400 in FY27E as high-profile assets in Delhi Aerocity go on stream. Separately, Prestige Estates has the strongest project lineup in the commercial and retail segments as compared to its peers.
#### Financial Stability and Debt Profile The brokerage expects the company to generate annual operating cash flows (OCF) of ₹7,000–8,000 crore, sufficient to fund ₹3,000–3,500 crore annuity capex and ₹4,000–5,000 crore growth capex each year. Net debt and leverage ratios are seen remaining stable, with upside support from a potential listing of the company’s hospitality subsidiary.
#### Valuations Nomura sees Prestige Estates valuations as cheap, given the stock currently trades at a 40 per cent premium to net asset value (NAV), lower than Godrej Properties at 108 per cent. Analysts argue valuations are undemanding given the company’s growth trajectory. Downside risks include a slowdown in the Bangalore residential market or weaker-than-expected leasing momentum in annuity assets.
