It varies from company to company. For eg, I was invested in a small cap real estate firm…Asiana Housing…they recognised revenue after receiving full amount against a particular flat. (PS not invested anymore)
Most of the companies, however, recognise revenue on flat’s booking.
Prestige Estates upcoming launches expected to have a Gross
Development Value of 752,000 crore, potentially resulting in pre-sales of ‹20,000 crore to ‹22,000 crore.
What happen to the launches ??? if anybody have some idea…is RERA approve for Indrapuram NCR?
Issues with approvals for most of the real estate plays. Overhang and dead inventory may arise or might have arisen due to such developments.
But short term pain for a long term investor in real estate businesses. All due to elections last year
Hi Gautam or anyone who can confirm this,
As per management, the following Prestige projects are scheduled for launch in Q4, subject to RERA approval:
I tried checking the status through Prestige’s dedicated websites for each project:
This suggests that, as of now, only Prestige Nautilus has been approved.
Is there any other way to verify the RERA approval status for these projects?
No update anywhere…RERA approval is still pending
which one is the most promising prestige project among this list for an ROI perspective in the longer run?
In my view, Indirapuram stands out as the highest ROI project, not merely due to its higher GDV but primarily because it falls within the mid-value segment rather than luxury.
One key challenge with luxury projects is that, despite higher margins, collections take longer, leading to inventory buildup and impacting the ROCE. This is evident in the management’s commentary as well.
For instance, in Q3FY25 Concall, the management stated that they expect ₹2,000 crore in pre-sales from the Nautilus project, which has a GDV of ₹8,600 crore and an average GDV per sq ft of ~₹30,000 per sq. ft (Source: Investor Presentation) making it a luxury segment. This translates to a pre-sales percentage of just 23%.
In contrast, for Indirapuram, they anticipate ₹5,000 crore in pre-sales on a GDV of ₹11,500 crore, reflecting a significantly higher pre-sales percentage of ~43%.
Prestige Nautilus.pdf (686.1 KB)
I found this on Maharashtra RERA Website
It may seem like a very cursory question - But I want to understand how does Prestige recognises revenue? I heard Irfan say in an interaction in some projects they do it on Percentage Completion and on some projects on completed method. Want understanding on this
As per the Annual Report, the Company recognises revenue from the sale of real estate inventory property at a point in time either upon transfer of legal title or handing over of physical possession to the customer, whichever occurs earlier. However, in the case of JDAs, where the landowner is entitled to a share of constructed area or revenue proceeds, the Company recognises revenue over time using the % of Completion method.
Sales of over 3000Cr in one week for Prestige City, Indirapuram.
thesis in detail
-company has 20000crs of inventory which they have launched in q1 fy26 ppt
-have upcoming projects of 40000crs in pipeline(late stage approval) same in ppt q1 fy26 ppt
-company has guided they have total pipeline of 60000 crs but lets be conservative and expect that only 40000crs to the market
-so what we have is total 40000crs of new launches upcoming and 20000 crs of already launched projects so in total 60000 crs
this is the upcoming part
base of last year 17700 crs in fy24 due to approval issues , elections central and state , this is where it gets interesting as a destroyed base is favourable for future
q1 fy25 they did around 3000crs of pre sales(just keep this number in mind)
q1 fy26
commentary
-they confirmed that they have sold 6500 crs in indirapuram project
also confirmed that they sold 800 crs in bangalore project so total confirmed sales come to 7300 crs and this is confirmed
-guided for 13000 crs of pre sales in q1 fy26 (and this is on the base of 3000crs in q1 fy25 400% growth
broad valuations
-4000crs by fy29 annuity income which should atleast get 10x multiple
-6500 crs of hotel ipo that is coming up
sotp
also in a sense paying only for Q1 pre sales
all this framework learnt by reading and listening to @phreakv6 @harsh.beria93 and my mentor most importantly @Worldlywiseinvestors
thanks
Very well articulated. My friend has compiled the current Market Cap to Pre-Sales ratios of several listed real estate players as of today. It’s evident that market perception is shaped not just by headline numbers but also by qualitative factors such as the developer’s brand positioning in the luxury segment, the stability and growth trajectory of its annuity income, and the visibility of its project pipeline.
Specifically, when analyzing Prestige’s forward guidance and current valuation, there does appear to be a reasonable margin of safety.
That said, I had a specific question regarding the valuation methodology of the annuity income stream. The current annuity income is INR 741.5 crores, and the management has projected this to scale up to INR 4,400 crores by FY29, as per the latest Investor Presentation. However, instead of applying a flat multiple say, 10x on this terminal figure, shouldn’t this future income be appropriately discounted to its present value, considering execution timelines?
Here’s how we approach this in two parts:
PART 1: Rental Yields – Malls and Luxury Hotels in Metro Cities (India)
Rental Yield Estimates (as of FY25):
| Asset Type | Rental Yield (Metro Cities like Mumbai, Delhi, Bangalore) |
|---|---|
| Grade A Malls | 7%–8.5% (net yield after CAM etc.) |
| Luxury Hotels (operated, leased out) | 5.5%–7% (EBITDA yield; asset-heavy) |
| Luxury Hotels (owned + operated) | ~4%–6% net effective asset return |
Note: Hotels are valued on EBITDA yield or RevPAR basis rather than simple rent, as operator model varies. Malls often on pure rental income + escalations.
PART 2: Asset Valuation from Forward Yield
Assumption:
Company expects ₹4,000 Cr annual revenue yield 4 years from now (FY29), presumably from rental or annuity-like assets.
We’ll value this asset today, using a discounted cash flow (DCF) or capitalization (yield-based) approach.
Step 1: Capitalization Approach (using Terminal Yield)
Let’s assume ₹4,000 Cr is stabilized net rental income in FY29.
Use different cap rates (yield expectations):
| Capitalization Yield | Valuation = ₹4,000 Cr / Cap Rate |
|---|---|
| 6.0% (premium mall/hotel) | ₹66,667 Cr |
| 6.5% | ₹61,538 Cr |
| 7.0% | ₹57,143 Cr |
| 7.5% | ₹53,333 Cr |
| 8.0% | ₹50,000 Cr |
Step 2: Discounted Present Value (from FY29 to FY25)
Discount those values back 4 years using discount rates of 10%–12% (real estate WACC typical in India):
\text{Present Value} = \frac{\text{Future Value}}{(1 + r)^n}
Where:
Let’s take the ₹57,143 Cr value (from 7% cap rate) as base:
| Discount Rate | PV = ₹57,143 Cr / (1 + r)^4 |
|---|---|
| 10% | ₹38,958 Cr |
| 11% | ₹37,684 Cr |
| 12% | ₹36,509 Cr |
Conclusion:
If ₹4,000 Cr is stable net income by FY29, the fair value today (FY25) is:
had run this query sometime back
I’ve made a rough financial model for this company and wanted to check if I’m using the right approach and metrics. One of the things I’m unsure about is how to calculate the Pre-Sales to Market Cap ratio should it be taken for the entire company or only based on the residual value of the residential business?
More broadly, I’m still figuring out how to value real estate companies. I’m not entirely sure which metrics matter most is it Pre-sales, Collections, GDV, Land Bank, Cash Flows, or something else? My goal is to understand whether there’s any margin of safety at current prices and whether the valuation leaves any upside for a new investor. I’m not trying to time the market but rather learn how to think through valuation frameworks in the real estate space.
Would really appreciate any inputs or corrections from more experienced members here! Disclaimer: This is not a buy/sell recommendation. I’m still learning and would appreciate any guidance.
Prestige Financial Model.xlsx (11.5 KB)
