Prestige Estates’ Rs. 5,000 Crore QIP: A Bold Move to Fuel Growth

Prestige Estates Projects Ltd, a leading real estate developer based in Bengaluru, is preparing to launch a substantial qualified institutional placement (QIP) worth up to Rs. 5,000 crore. Sources suggest that the QIP could be announced as soon as this week. This move follows the board’s approval on June 21, aiming to issue new equity shares or other eligible securities to raise capital.

What’s the Deal?

Prestige Estates has brought on board Kotak Mahindra Capital, JP Morgan, JM Financial, and CLSA as advisors for the QIP. The floor price for the share issue is pegged at Rs. 1,755.09, pretty much in line with the recent stock closing price. The indicative issue price is Rs. 1,674 per share, which represents a 5% discount on the floor price. This capital raise is expected to result in a 7.45% dilution of the company’s equity.

How the Funds Will Be Spent

The funds raised will be put to good use. The top priority is repaying or prepaying some of the company’s debt. Next up is acquiring land or development rights. Additional investments will go into subsidiaries and joint ventures to fund ongoing and new projects. The remainder will be used for general corporate needs.

Stock & Market Performance

Prestige Estates’ stock has been on a roll, up 50.25% in the past six months. Despite a 23% dip in Q1 FY25 sales bookings compared to last year, the company still hit a solid Rs. 3,029.5 crore in sales. For FY24, Prestige set a new record with sales of Rs. 21,040 crore, a huge 63% jump from the previous year.

Conclusion: What’s Next? The announcement of the QIP sent Prestige Estates’ stock up by 2.2% by the end of trading day yesterday, closing near its daily high. Moreover, today, the stock rose nearly 3% following the QIP news. This QIP is a big step for Prestige Estates, supporting their plans and investments in the real estate market, going ahead.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.