Shares of SignatureGlobal (India) Ltd surged 5 percent following an upgrade by Kotak Institutional Equities, which raised the stock's rating to 'Buy' from 'Add' and also upgraded the target price to Rs 1,570 from Rs 1,555. Kotak's upgrade came on the back of Signatureglobal's robust sales performance, solid cash generation, and attractive valuations.
"Signature is attractively valued at ~6X EV/EBITDA, we accordingly upgrade the stock to a 'Buy' with a revised FV of Rs 1,570 (from Rs1,555), as we take comfort from the cash generation done by Signature Global despite the poor recognised margins on the income statement. The revision in FV is mainly on account of a higher sales velocity leading to healthier asset turnover," Kotak said in its recent research report.
At 11.20 AM, SignatureGlobal's shares traded 3 percent higher at Rs 1,324. The stock has risen 44 percent year-to-date, significantly outperforming the Nifty 50, which recorded an 11 percent gain over the same period. SignatureGlobal's monthly returns from May to September were positive, although the stock did lose nearly 15 percent in October.
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As per Kotak, SignatureGlobal is on track to achieve its full-year guidance with new project launches planned for Gurgaon and Manesar in the second half of FY25.
Kotak highlighted SignatureGlobal's impressive pre-sales growth, reporting a 217 percent year-on-year increase to Rs 5,900 crore in the first half of FY2025, with pre-sales for the full year expected to reach Rs 10,000 crore. According to Kotak, SignatureGlobal's recent launch of a mid-income housing project, 'Daxin', in Sohna added Rs 2,300 crore to pre-sales in Q2FY25.
However, collections lagged, with the company's H1FY25 collections at Rs 2,130 crore, below the FY25 goal of Rs 6,000 crore. "Management expects collections to pick up in H1FY25, aided by the recently done pre-sales; it remains confident of achieving the Rs 60 bn (or Rs 6,000 crore) FY25 guidance." Kotak said.
Incorporated in 2000, SignatureGlobal is a real estate development company operating in the National Capital Region of Delhi focussed on offering affordable and mid-segment housing.
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