Prestige Estates & Projects Ltd. IPO : Avoid

Historical Map of Bangalore, India, circa 1924.

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Prestige Estates and Projects Ltd (PEPL) is a Bangalore based real estate company having business presence in all segments (Residential, Commercial, Retail and Hospitality). The residential and commercial segment contributed more than 80% of its revenue for the financial year ended March 2010. The retail category through rental income contributed the rest.

At the floor price, the issue is priced at 31 times its consolidated EPS for year ended March 31, 2010. Issue pricing is expensive compared to its peer companies such as Sobha Developers and Puravankara Projects whose operations are concentrated in South India and are trading at 23 and 17.5 times their respective earnings for last year. The industry composite PE stands at 26. The IPO is relatively expensive compared to its peers.

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