Prestige Estates Considers Shift to Percentage-of-Completion Accounting Method Amid ₹65,000 Crore Unrecognised Revenue
Prestige Estates Evaluates Accounting Shift as Unrecognised Revenue Swells to ₹65,000 Crore
Prestige Estates Projects holds ₹65,000 crore in unrecognized revenue following record FY26 sales of ₹30,024 crore. The accumulated pipeline reflects a company caught between explosive growth in presales and the accounting conventions that govern when and how those sales translate to reported earnings.
The Shift Under Consideration
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. This accounting choice is consequential: it fundamentally alters when revenue appears on the profit-and-loss statement.
Under Prestige's current approach—aligned with how many real estate developers report in India—in real estate, this gap occurs because developers often record revenue only when a project is completed and handed over to the buyer. That deferred recognition creates the large unrecognised pool.
What POC Accounting Would Change
The POC accounting method works on the principle that you should be able to track revenue in line with the project's progress. It means that if 50% of a project is complete, you should be able to calculate 50% of the total expected revenue. Rather than waiting for handover, the developer would recognise revenue progressively as construction advances.
For investors and lenders, this offers transparency: you recognize it as you go, which gives you a much more realistic and consistent view of your company's financial performance throughout the life of a project. It also smooths quarterly earnings, reducing volatility that can arise when multiple projects complete in the same period.
However, the method introduces estimation risk. Estimating total project costs often involves significant judgment, presenting opportunities for shifting revenue recognition across periods. This complexity is compounded when dealing with hundreds or thousands of projects at a time, each estimated by different project managers who may bring their own biases to the determination of POC.
The FY26 Sales Surge and the Backlog
The company's pre-sales or sales bookings stood at a record ₹30,024 crore in the 2025-26 fiscal, up 76% from the preceding year. This exceptional growth—driven by strength across Bengaluru, Delhi-NCR, Mumbai, Hyderabad, and Chennai—underscores demand for Prestige's portfolio. Yet 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.
The gap between sales bookings and recognised revenue is not unique to Prestige; it is structural in property development. Buyers commit capital and sign agreements, contractors execute, and revenue recognition depends on the accounting framework. A shift to POC would begin releasing that ₹65,000 crore backlog into earnings as projects progress.
Investor Implications
An accounting method change of this magnitude requires careful scrutiny. 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.
For Prestige, which has its shares listed on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE), such a decision must be disclosed to markets and explained to institutional stakeholders. It is not merely an accounting housekeeping matter—it signals management's confidence in long-term project delivery and cost control.
Prestige's Scale and Track Record
As of December 2025, the Prestige Group has an impressive track record, having delivered 313 projects spanning 206 million square feet. Its future development pipeline remains robust, with 128 projects covering 195 million square feet currently underway. This scale—across multiple geographies and property types—underpins the company's ability to estimate completion timelines and costs across a large, diversified portfolio.
Prestige Estates Projects Limited was incorporated on June 04, 1997 as a company under the Companies Act, 1956. The Company is engaged in the business of real estate development and is a public limited company incorporated and domiciled in India.
The Broader Real Estate Accounting Landscape
Prestige's consideration of POC aligns with evolving global standards. The rules apply to all real estate transactions, including off-plan sales (when property is sold before construction is completed). The debate between completed-contract and percentage-of-completion methods has long structured real estate accounting, and major public developers often adopt POC to provide clearer, more granular quarterly visibility to capital markets.
The decision, if confirmed, will be material. It affects not only how Prestige's earnings are reported in the quarters ahead, but also how investors assess growth, profitability, and cash generation. For a developer with record sales momentum and a ₹65,000 crore backlog of unrecognised revenue, the accounting method chosen will shape the narrative of growth for years to come.