Prestige Estates Projects holds ₹65,000 crore in unrecognized revenue following record FY26 sales of ₹30,024 crore. The company is considering a transition to the percentage-of-completion accounting method, a move that could significantly change how its earnings and revenue are reported to shareholders in coming quarters.
What Happened
Prestige Estates Projects Ltd. is currently holding ₹65,000 crore in unrecognized revenue. This massive figure represents the value of property sales that have been booked by the company but have not yet been recorded as income in its profit and loss statement. In real estate, this gap occurs because developers often record revenue only when a project is completed and handed over to the buyer. This accumulation follows a strong performance in the 2025-26 fiscal year, where the company recorded sales bookings of ₹30,024 crore, a 76% increase from the previous year.
The Accounting Shift Under Review
Chairman Irfan Razack has indicated that the company is currently in discussions with its auditors about changing its revenue recognition method. The company currently uses the 'completion method,' where income is only recognized once the project is fully finished and delivered. They are considering a shift to the 'percentage of completion method.' Under this approach, developers recognize revenue gradually as the construction work progresses.
For investors, this is a critical distinction. If the company makes this switch, it could lead to a smoother and more consistent reporting of revenue and profit over time. However, it also changes the baseline, as it pulls forward revenue recognition that would otherwise have appeared only at the end of a project. This does not change the actual cash collected, but it significantly alters the financial picture presented in quarterly reports.
Financial Growth and Future Targets
The company reported a strong financial year for 2025-26, with net profit more than doubling to ₹1,195.5 crore from ₹467.5 crore in the prior year. Total income also saw a sharp rise, reaching ₹13,195.5 crore compared to ₹7,735.5 crore in 2024-25. Building on this momentum, the company has set an ambitious target of ₹35,000 to ₹36,000 crore in sales bookings for the 2026-27 fiscal year.
Business Risks and Monitorables
While the sales numbers are high, investors should consider the operational realities of the sector. The company has a pipeline of new project launches valued at approximately ₹58,000 crore. However, these launches are not guaranteed; they depend heavily on obtaining timely regulatory approvals. Any delays in these permissions could affect the company’s ability to meet its sales booking targets for the coming year.
Furthermore, while the potential accounting shift offers more stability in reported earnings, it requires careful monitoring by investors to understand the true underlying growth versus the changes in reporting. The key items for investors to track include any official confirmation regarding the change in accounting policy, the actual pace of project launches, and whether the company can maintain its sales momentum amidst potential economic uncertainties.