Nomura Bullish on Prestige Estates: Sees 17% Upside Potential
Global brokerage Nomura has initiated coverage on Prestige Estate Projects with a ‘Buy’ rating and a target price of ₹1,900, which implies a 17% upside from the recent closing price of ₹1,624.7 per share. According to Nomura, Prestige Estates is “doing all things right” and is transforming itself into a pan-India player, while building a solid annuity-plus-hotel portfolio.
At 9:53 AM, Prestige Estates shares were trading 0.34% higher at ₹1,630.25 per share. In comparison, the BSE Sensex was up 0.29% at 82,623.09. Year-to-date (Y-T-D), Prestige Estate shares have slipped 3.5%, while the Sensex has risen by 4%.
### Why is Nomura Bullish on Prestige Estate Projects?
#### Pan-India Strategy, Stronger Scale in Mumbai & NCR Nomura’s analysis shows that Prestige Estates’ pan-India growth strategy is superior to its peers. The company is expected to scale up significantly, particularly in Mumbai and the Delhi National Capital Region (NCR), driven by both mid-income township and luxury projects. The company has guided for FY26E pre-sales of ₹25,000–27,000 crore, but brokerages expect the developer to surpass these estimates with pre-sales of about ₹29,000 crore, a 70% year-on-year (Y-o-Y) increase, which is 10% higher than guidance.
The company delivered ₹12,100 crore of pre-sales in Q1FY26 alone and has a launch pipeline of 29 million square feet (msf) with a Gross Development Value (GDV) of ₹29,900 crore in the remaining nine months. Even if only 70–80% 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) 4-5 times over the next 4-5 years. In the commercial segment, the company expects exit rentals to grow from ₹820 crore in FY26 to ₹3,850 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, management expects to expand from 1,200 rooms in FY25 to 2,400 rooms in FY27E as high-profile assets in Delhi Aerocity go on stream. Prestige Estates has the strongest project lineup in the commercial and retail segments compared to its peers.
#### Financial Stability and Debt Profile Nomura expects the company to generate annual operating cash flows (OCF) of ₹7,000–8,000 crore, sufficient to fund ₹3,000–3,500 crore in annuity capital expenditures (capex) and ₹4,000–5,000 crore in growth capex each year. Net debt and leverage ratios are expected to remain stable, with potential upside from the potential listing of the company’s hospitality subsidiary.
#### Valuations Nomura sees Prestige Estate valuations as cheap, given the stock currently trades at a 40% premium to net asset value (NAV), lower than Godrej Properties at 108%. Analysts argue that 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.
