Plan To Clear Entire Debt Of The Hospitality Business With IPO This Year: Prestige Group | CNBC TV18

Summary

Prestige Estates faced a challenging FY25 with project delays but is optimistic for FY26. The company plans significant growth, with launches totaling nearly 45 million square feet and pre-sales targets of 27,000 crores. New projects across various markets, including Mumbai, NCR, Chennai, and Bangalore, are set to drive this optimism. Despite rising land and construction costs, Prestige aims to balance pricing and affordability, with expected single-digit price increases. The company also sees strong demand in luxury and mid-market segments. Additionally, a hospitality venture IPO is planned for FY26, targeting around 3,500 crores.

Takeaways

• 😀 Prestige Estates had a slower year in FY25 due to project delays, but is optimistic for FY26 with stronger growth projections.
• 😀 The company plans to launch approximately 45 million square feet of new projects in FY26, compared to 25.5 million in FY25.
• 😀 Prestige's pre-sales target for FY26 is 27,000 crores, and the company is confident that the guidance will be surpassed.
• 😀 Several new projects are lined up across key markets like Bangalore, Chennai, Hyderabad, Mumbai, and NCR, including the launch of 'Prestige City Indrauram' in NCR.
• 😀 The market demand is strong, with high buyer interest and sales performing well in recent launches like 'Prestige City Indrauram' and 'Prestige Garden Estate'.
• 😀 Pricing strategies are carefully managed, aiming to avoid excessive price hikes while balancing affordability with company profitability.
• 😀 Price increases of 5-7% are anticipated for the mid-market segment, while luxury segments could see higher increases.
• 😀 The 'Prestige City Indrauram' project launched 3,400 units, and almost 2,800 to 2,900 units have already been sold, totaling sales worth 7,000 crores.
• 😀 Prestige Estates is preparing for an IPO of Prestige Hospitality Ventures with a target of raising 3,500+ crores through a combination of OFS and primary dilution.
• 😀 The company plans to clean up its debt using proceeds from the hospitality IPO, enabling future growth and acquisitions.
• 😀 Major ongoing projects include the 'St. Regis' and 'Marriott Marquee' hotels in Delhi Aerocity, and the Pali Hill project in Mumbai, which is progressing well despite challenges.

Q & A

What were the key reasons for Prestige Estates having a lackluster year in FY25?

The key reasons for Prestige Estates having a weaker performance in FY25 were project delays and approvals, including issues with RAR numbers, which affected their ability to launch projects and achieve desired sales.

What is the sales target for Prestige Estates in FY26, and how does it compare to the previous year?

Prestige Estates' sales target for FY26 is 27,000 crores, with planned launches covering approximately 45 million square feet. This is a significant increase from FY25, where they launched only about 25.5 million square feet.

What new projects has Prestige Estates launched, and how are they performing?

Prestige Estates has launched several new projects, including the Prestige City in Indra Puram (NCR), Prestige Garden Estate in Bangalore, and the upcoming Prestige Palawaram Gardens in Chennai. The launches have been successful, with strong sales performance, especially in the Prestige City project, where 2,800 to 2,900 units have been sold.

How does Prestige Estates approach pricing for their projects, especially in terms of affordability?

Prestige Estates strives to balance pricing sensibly to ensure that their products remain affordable while maintaining profitability. The company has focused on keeping the price increases within a reasonable range to avoid pricing their products out of reach for buyers.

What is the expected price increase across Prestige Estates' portfolio in FY26?

The price increase is expected to be modest, with the mid-market segment seeing a price rise of around 5-7%, while the luxury market is expected to experience a larger increase. However, the company aims to avoid excessive price hikes to maintain demand.

What are the details of the Prestige City Indra Puram project and its sales performance?

The Prestige City Indra Puram project consists of 4,000 units, with 3,400 units already launched. The project has seen strong sales, with approximately 2,800 to 2,900 units sold, totaling over 7,000 crores in sales revenue.

When is the Prestige Hospitality Ventures IPO expected to launch?

Prestige Estates has filed the DRHP for Prestige Hospitality Ventures and is waiting for approval from SEBI. The company is hopeful that the IPO will launch in the middle of the current fiscal year, potentially as soon as the next quarter.

How much money does Prestige Estates aim to raise through its IPO, and how will the funds be used?

Prestige Estates aims to raise around 3,500 crores through the IPO, with the funds split between an offer for sale (OFS) and primary dilution. The goal is to clean up the company's debt, particularly in the hospitality segment, and to create room for future acquisitions.

What is the status of Prestige Estates' hospitality projects, especially the Delhi Aerocity hotel?

One of the largest hospitality projects under construction is the Delhi Aerocity hotel, which will feature the St. Regis and Marriott Marquee brands. The hotel will be the largest in India in terms of rooms and will also include a massive convention and exhibition center.

What is the status of the Palihill project, and how much of it has been sold?

The Palihill project in Mumbai is progressing, with construction underway despite the challenging terrain. Around 70% of the units have already been sold, and the first deliveries are expected within a couple of years. Recent developments in Mumbai have also been completed, with three large projects ready for occupancy.