Why Puravankara Share Price is Rising

India's real estate market stands out as one of the world's most dynamic and rapidly growing sectors.

Over the last six months, demand has regained momentum, resulting in a substantial increase in the share price of real estate stocks, ranging from 27% to 95%. During this period, the Nifty Realty index has surged by over 43%.

This resurgence can be attributed to the sector's ability to attract substantial inflows from foreign investors (FIIs) and domestic institutions in recent months.

One notable beneficiary of this trend is Puravankara, a real estate company whose shares experienced a noteworthy 5% surge in a single day, reaching its 52-week high.

Here's why Puravankara share price is rising.

#1 Robust Q2 Sales

The recent surge in Puravankara shares could be attributed to the company's results for the September 2023 quarter.

Puravankara reported a 54% year-on-year (YoY) increase in revenue, from Rs 2.4 bn last year to Rs 3.7 bn in the September 2023 quarter. During the same period, net losses reduced from Rs 172.2 million (m) to Rs 112.2 m.

The company recorded sales of Rs 16 bn, an increase of 102% YoY. Sales volume for the quarter stood at 2.01 million square feet (MSF) up by 89% year on year, with a strong customer collection of Rs 8.8 bn.

Puravankara achieved revenue of Rs 6.9 bn from projects, which grew by 52% YoY.

In the second quarter of FY24, the company launched one new project, Provident Ecopolitan (Bengaluru), and new phases for Purva Park Hill (Bengaluru) and Purva Windermere (Chennai), totalling 2.1 MSF.

#2 Luxury Redevelopment Venture

Adding to the rally, the company, on 16 November 2023, forayed into the redevelopment space in Mumbai. It secured the residential redevelopment rights for two housing societies in the western suburbs. The potential gross development value (GDV) is Rs 15 bn over the entire life cycle.

Construction for these luxury projects is expected to begin in the next financial year.

The initial redevelopment undertaking is situated in the prime locality of Lokhandwala in Andheri West, spanning three acres. It boasts an estimated cumulative development potential of 5.8 lakh square feet of carpet area, with approximately 3.65 lakh square feet earmarked for sale.

According to experts, the foray into redevelopment projects in Mumbai is expected to contribute significantly, accounting for approximately 50-60% of the company's top line through presales and, eventually, bottom-line figures as well.

The company recently finalised the agreement for its inaugural redevelopment project in Mumbai and is poised to submit its plans within the next 60 days.

The official launch of the project is anticipated in the upcoming financial year. Presently, Puravankara is actively involved in the construction of two projects in Mumbai-one on industrial land in Chembur and another under a joint development agreement in Thane.

The company is also in discussions with landowners for various joint development opportunities in Mumbai, the Mumbai Metropolitan Region (MMR), and Pune.

The Lokhandwala redevelopment project in Andheri West is anticipated to be an upscale luxury venture, further enhancing Puravankara's presence in the dynamic Mumbai real estate market.

What Next?

Going forward, Puravankara plans to launch 7.6 MSF of residential development with a topline of about Rs 50 bn within FY24.

In the previous financial year, the company achieved a business turnover of Rs 31.1 bn. It introduced 3 MSF of inventory for sale out of the 6 MSF approved for launch.

In the current financial year, there was a substantial increase, with the inventory for the sale nearly doubling to 7.6 MSF out of the planned 15 MSF launches. Puravankara anticipates generating a surplus of Rs 112 bn from operations within the next 3-4 years.

These launches are distributed across key cities, including Bengaluru, Hyderabad, Chennai, Pune, and Mumbai, with Bengaluru expected to host the majority of these developments.

How Shares of Puravankara have Performed Recently

Puravankara share price is up 6% in five days, while over the month, the shares are trading higher by 16%.

Over the year, shares of the company have gained 80%.

The company touched its 52-week high of Rs 162.8 on 16 November 2023 and its 52-week low of Rs 58.2 on 28 March 2023.

Puravankara is currently trading at a PE (Price to Earnings) multiple of 154.7x.

About Puravankara

Puravankara has been a pioneer in the Indian real estate industry for over four decades.

The company has developed over 80 projects across India, with a total developable area of over 40 million square feet.

The company has a strong presence in key markets across India, including Mumbai, Bangalore, Chennai, Hyderabad, and Pune.

For more details, you can have a look at the Puravankara company fact sheet and quarterly results on our website.

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