On Tuesday, Prestige Estates Projects (NS:PREG) Ltd (PEPL:IN) stock received a positive outlook from UBS, as the firm initiated coverage with a Buy rating and set a price target of INR2,175.00. The real estate company, known for its diverse portfolio and strong execution track record, has been identified as an attractive investment within the sector.
UBS highlighted Prestige Estates' geographical and segmental diversity, its commendable execution record, and a robust launch pipeline for both residential and commercial properties. The company's financial health was also noted, with a balance sheet showing leverage well under control.
These factors contribute to UBS's expectation of revenue and earnings compound annual growth rates (CAGRs) of 25-30% from fiscal year 2024 to 2029, a significant increase compared to the roughly 10% CAGR observed before the pandemic from FY11-20.
The valuation of Prestige Estates also appears promising to UBS, which sees potential for stock price appreciation. The firm's one-year forward price-to-book (P/B) ratio stands at 3.6x, suggesting there is room for the stock to rise. UBS's initiation of coverage comes with the anticipation that upcoming residential project launches, particularly in the third and fourth quarters of 2024 which were delayed from the first half of the year, along with the development of major rental and hospitality assets, will serve as key drivers for the company's growth.
Prestige Estates' strategic focus on timely project launches and the advancement of its significant rental and hospitality assets are seen as potential catalysts for the company's future performance. UBS's coverage initiation and price target reflect a confidence in Prestige Estates' ability to capitalize on these opportunities and deliver strong growth in the coming years.
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