Momentum Pick: Flag & pole pattern nearing completion, is Prestige Estates ready for next leg of rally?

Prestige Estates Project shares have been on a roll for the past six trading sessions and the stock has gained 10% in this rally. On Wednesday, the Prestige hit its 52-week high of Rs 537. The next milestone for the counter is its lifetime high of Rs 554. Now that the stock is on the verge of completing the consolidation phase, a fresh leg of rally beckons for this Bengaluru-based company.

Prestige Estates shares have given returns of 23.7% over a 12-month period outperforming the broader index Nifty50 which has given 14.1% returns during this period according to Trendlyne data. However, it has underperformed Nifty Realty which has given returns of 27.61%.

Prestige Estates Projects develops properties in residential, office, retail and hospitality segments. An over three-and-half decade builder has presence in top 12 markets across India with 255 projects spanning 144 million square feet under its belt.

Technical View
Chandan Taparia: Hold | Target: Rs 600-625 | Stop Loss: Rs 485 | Upside: 20%
Chandan Taparia, Head – Technical & Derivatives Research at Motilal Oswal Financial Services Limited (MOFSL) said that Prestige is completing a pole and flag pattern formation on a monthly time frame. It is holding well above the Rs 520 zone after a long consolidation of many weeks, Taparia said.

Moreover, the counter has been respecting its key exponential moving averages on a daily frame and is now heading towards its lifetime high level of Rs 554, the MOFSL analyst said.

The stock is placed strongly on technical charts for an upside of Rs 600-625 zones as long as it does not break the support of Rs 485, Taparia said.Prestige has been trading with a 1-year beta of 0.72 which indicates very low volatility.

Sharekhan: Buy | Upside: 20%

Sharekhan retains a positive view on Prestige estimating a 20% upside potential. The company is well-positioned to benefit from sustained traction in the residential real estate market owing to its leadership positioning in Bengaluru and positive response garnered in key markets such as Mumbai and Hyderabad, the brokerage firm said.

It also has a strong launch pipeline across key markets. The company’s aggressive expansion in the annuity portfolio is expected to generate a multi-fold increase in rental income, providing steady state cash flows, the Sharekhan report said.

The Bengaluru-based developer reported strong pre-sales and collections growth of 19% year-on-year (YoY) and 12% YoY, respectively, for Q4FY2023. The January-March quarter earnings were better than Sharekhan’s expectation. Moreover, the management expects to achieve 25% YoY growth in residential pre-sales for FY2024, the brokerage report said further.

Key Risks

— A slowdown in real estate demand, especially in the Southern region, is a key risk to our call.

— Unfavourable macro-indicators like a rise in interest rates can dampen off-take.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)