ICICI Securities maintains ‘BUY’ on Sunteck Realty with a TP of INR 541

ICICI Securities a leading technology based securities firm in India has maintained “BUY” on Sunteck Realty in its latest research report. The reports states that Sunteck Realty Limited (SRL) is riding on a high-growth path with its recent foray into the affordable housing segment. The report values Sunteck’s affordable housing foray at Rs. 8.8bn or Rs. 62/share. Other factors such as a robust futuristic growth path derived from sales pick up in Goregaon and BKC projects, strong brand recall in Mumbai and a strong balance sheet (post QIP) with net D/E of 0.2x; gives Sunteck an edge to capitalize on a lot of distressed opportunities in the market. ICICI Securities in its recent research report observed “We expect sales momentum to improve in the coming quarters on the back of improved sentiment and renewed activations. The company will be launching the Naigaon affordable housing project in next 2-3 months and is also planning to launch Avenue 3 and 4 residential projects at ODC, Goregaon in H2FY19.” SRL reported Q4FY18 consolidated revenue of Rs. 2.1bn, which was driven by sales bookings at its BKC projects. With ~40% share of revenue coming from completed high margin BKC projects, EBITDA came in at Rs. 1.1bn with EBITDA margin of 51.7%. Consequently, adjusted PAT of Rs. 0.6bn was in line with estimates. Sunteck clocked Q4FY18 sales bookings of Rs. 1.9bn and collections of Rs. 1.5bn vs. Q3FY18 sales of Rs. 1.0bn and collections of Rs. 1.0bn. The better performance was on account of BKC projects (Rs.770mn), ODC Goregaon (Rs.510mn) and Signia High (Rs.220mn). “The company offers a mix of exposure to luxury housing (BKC), premium housing (Goregaon ODC), annuity assets (Goregaon ODC) and affordable housing (Naigaon JDA land parcel)” states the report.