Strong pre-sales
Quick Pointers:
▪ Achieved 31% YoY growth in pre-sales aided by Nepean Sea Road project
▪ Guided 20% YoY growth in collections in FY26.
Sunteck Realty (SRIN) reported strong pre-sales (31% YoY) and steady collections (up 3% YoY) in Q1. SRIN’s proven ability to market ultra-luxury projects, aggressive and multi-pronged land acquisition capabilities in various micro markets across Mumbai Metropolitan Region (MMR) is an interesting play on Mumbai’s high value real estate market. We expect the company’s presales to grow to +20% CAGR over FY25-27E, aided by ongoing projects and strong new launches pipeline including the Dubai JV project. Further given likely strong cash flow generation, we see SRIN to step up new project additions which will be a key catalyst for stock performance. Our FY26E and FY27E broadly remain unchanged. Maintain ‘Buy’ rating with TP of Rs. 650/share.
BKC and ODC 4th Avenue aided sales momentum: Operationally, SRIN reported EBITDA of Rs 477mn vs Rs 314mn in Q1FY25; aided by BKC and 4th Avenue projects. Consolidated revenues declined by 40% YoY to Rs. 1.9bn due to higher base from revenue booking of Max World, Naigaon in Q1FY25. PAT came in at Rs. 334mn vs Rs 228mn YoY and Rs. 504mn QoQ. During the quarter, the company reported net debt of Rs. 730mn; increased by Rs.2bn QoQ.
Pre-sales aided by Nepean Sea and other existing projects: SRIN’s pre-sales improved 31% YoY to Rs 6.6bn (down 24% QoQ); aided by existing projects. Nepean Sea road project contributed ~45% to the total pre-sales in Q1. There were no new launches in Q1. Overall, Uber luxury projects (3 BKC projects and Nepean Sea Road projects) contributed 58% (Rs 3.8bn) to total pre-sales while high midincome projects (Sunteck City, Beach residencies, Sky Park projects) contributed 34% (Rs. 2.3bn) to total pre-sales. During Q1, average realization increased 105% YoY (down 12% QoQ) to Rs. 23,038 psf. Collections grew by 3% YoY and 13% QoQ to Rs3.5bn.
Key con-call takeaways: (1) New BD activity target by FY26 – New BD activity continues to be aggressive where SRIN plans to add new projects to reach at total GDV of Rs 500bn by FY26, up from the current Rs 400bn. (2) New launches plan for FY26 – SRIN plans to launch GDV of Rs 110bn worth of launches in FY26, including ODC 5th Avenue (GDV of Rs 15bn), Bandra Bandstand (GDV of Rs 10bn), Nepean Sea Road (premium/uber-luxury), Andheri Redevelopment (GDV of Rs 11bn), Mira Road new tower (GDV of Rs 10bn), Vasai (2 new towers with GDV of Rs 5–6 bn) and Naigaon (GDV of Rs 5bn additional phase). (3) BD Investments and Strategy – Around Rs 3bn was invested in Q1FY26 toward business development. Mgmt cited strategy remains a hybrid model with a mix of asset-light (JDA/redevelopment) and asset-heavy transactions. (4) Dubai Project – launch is reiterated for Q4FY26 or Q1FY27. (5) Pre-sales and Collection guidance – Management expects collections to exceed FY25 levels driven by Mira-road and Vasai projects along with securing Occupation Certificate of 4th Avenue in ODC. Guidance: 30% YoY growth in pre-sales and 20% in collections. (6) Operating cash flow stood at Rs 1.1bn in Q1, driven by healthy collections. (7) Net debt to equity stood at -0.02x in Q1.
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