We recently interacted with the management of Sunteck Realty (Sunteck) which highlighted its preparedness to achieve 20-25% y-o-y growth in pre-sales for FY2025 while there is a deferment of launches in couple of projects to H1FY2025. It is witnessing healthy traction in its BKC project sales and eyes Rs. 1300-1400 crore inventory to get cleared over the next 4 years. The company continues to look at new BD deals with the recent inclusion of the Bandstand redevelopment project, the expected acquisition of adjoining land on Napean Sea road, the expected addition of the Borivali (W) project and the breaking ground on BD acquisition via the IFC platform. It remains on track to scale up its annuity income from Rs. 35 crore per annum in FY2024 to Rs. 320 crore in FY2028 at an overall capex spend of Rs. 950 crore. The company’s stock has corrected by over 20% in a little over trailing one month, which we believe unduly factors in the near-term sluggishness. The same provides an opportunity to Buy. Hence, we re-iterate our Positive view on the stock with 45% upside potential.
Valuation – Retain positive view with 45% upside potential: Sunteck Realty has a robust and sustainable growth potential in the near to long term, with solid foundations built across key regions and income groups in the lucrative MMR market. It remains committed to expediting sales at the ready assets at Bandra-Kurla Complex. The company has two major project launches during FY2025, which along with healthy sustenance sales from existing projects should aid in driving sales booking growth. Its tie up with IFC would provide further scale to sustain future growth. The stock has seen correction of over 20% in little over trailing one month which we believe unduly factors in the near term sluggishness in pre-sales. The stock is currently trading at a P/B multiple of 1.8x/1.7x on FY2025E/FY2026E and offers a buying opportunity. Hence, we retain our Positive view on the stock with an upside potential of 45% owing to its strong growth outlook over medium to long term.
Key Risks Slowdown in realty demand in MMR region, inability to expedite sales in BKC projects, delay in sales and/or execution in existing and upcoming projects.
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