IPO Alert: Prestige Group Plans to Launch Rs. 4,000 Crore IPO for Hotel Business; Should You Be Watching?

Prestige Group, one of the most well-known real estate developers in Bengaluru, is planning a big move, taking its hospitality business public through an initial public offering (IPO) worth Rs. 4,000 crore. If you've ever stayed in a Sheraton, Marriott, or Hilton property in Bengaluru, chances are you've already experienced a Prestige-managed hotel. Now, the company wants to invite the public to invest in that side of its business.

Prestige Group is preparing to launch an IPO specifically for its hotel and resort division. The board of directors has already given the green light, and the necessary paperwork called the Draft Red Herring Prospectus (DRHP) is almost ready as per a report by Moneycontrol. It's expected to be submitted by the end of this month or early next month. The company is working with top investment banks like Kotak Mahindra Capital and JM Financial to manage the IPO process, the report further mentioned.

Why Is Prestige Taking Its Hospitality Arm Public?

There are two main reasons why Prestige Group is going public. The first is to raise money for new hotels, as Prestige plans to use the funds from the IPO to expand its hospitality footprint by building new hotels and resorts.

The second major reason is to pay off debt, in which a portion of the money will also help the company reduce its existing debt to improve its financial position.

Prestige Estates records a good FY24 performance

As per the Axis Securities Report, Prestige has recorded its best-ever pre-sales of Rs 21,000 Cr and the highest-ever collections of Rs 11,950 Cr in FY24. The company has delivered 25 million sq. ft in FY24 with over 300 projects completed. In FY24, it also managed to achieve 75% of its sales from newly launched projects at Rs 15,700 Cr, demonstrating its execution capability and excellence in delivering large projects. The Prestige City Hyderabad achieved sales worth Rs 3,700 Cr within 4 months of its launch. On average, the company has sold 10,068 units, which means an average of 28 units per day in FY24. The average realisation for these projects was Rs 10,000 per sq. ft., reflecting a CAGR of 11% over the past 5 years. In Q1 FY25, it achieved a revenue of Rs 2,924 Cr with a PAT of Rs 307 Cr.

Prestige Real Estate Projects Shares

As of Thursday's market close, Prestige Estates stock settled at ₹1,215, reflecting a 0.66% gain for the day. Over the past five trading sessions, the stock has jumped 13%.

In its latest report, Axis Securities initiated coverage of Prestige Estates Ltd (PEPL) with a bullish stance. The firm issued a 'Buy' recommendation and a target price of Rs.2,195, indicating an upside potential of 35% from the current market price.

About Prestige Group

Prestige Group, founded in 1986, stands as one of India's leading and most prominent real estate developers. Originating in Bangalore, where it holds a significant market share, the company has expanded its presence across several metro cities. The group has made a mark across all asset classes, and with over 38 years of experience, it has completed more than 300 projects, delivering over 180 million sq. ft. As per Axis Securities.