ICICI Securities maintained buy call on Sunteck Realty with a target price of Rs 440, implying 27 percent potential upside after Q2 earnings.
Sunteck Realty shares rallied nearly 5 percent intraday Monday after ICICI Securities maintained buy call on the stock with a target price of Rs 440, implying 27 percent potential upside after Q2 earnings.
The stock was quoting at Rs 360.60, up Rs 13.45, or 3.87 percent on the BSE, at 14:52 hours IST.
ICICI Securities said considering the strong cash flow visibility from its completed projects, better leverage position (net D/E: 0.17x), its affordable housing foray and quality of the land bank, Sunteck is well placed to reap benefits in future.
Furthermore, the growth capital raised through QIP would be used for generating stable rental portfolio and affordable housing segment, it added.
After correction of 33.3 percent in the last three to six months, the research house believes the current valuations are attractive. Hence, it maintained buy rating on the stock with a target price of Rs 440 per share.
Sunteck Realty's revenues recognised de-grew 48 percent YoY to Rs 180.3 crore and profit degrew 15 percent YoY to Rs 54.7 crore due to high base in Q2FY18.
Profit was still lower than expectation of Rs 71 crore mainly on account of lower-than-expected topline growth and sharp EBITDA margin contraction, ICICI Securities said.
Company's EBITDA margins grew 14.6 percentage points (percentage points) YoY to 43.3 percent due to lower margin base in Q2FY18.However, it was way below expectation of 52.9 percent on account of higher operating costs, the research house said.