Buy SignatureGlobal India; target of Rs 1707: ICICI Securities

ICICI Securities is bullish on SignatureGlobal India recommended buy rating on the stock with a target price of Rs 1707 in its research report dated May 16, 2024.

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May 22, 2024 / 14:23 IST

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ICICI Securities research report on SignatureGlobal India

We retain BUY rating on SignatureGlobal India (Signature) with a revised target price of INR 1,707 (earlier INR 1,705), valuing the company at 9x FY24-26E average embedded EBITDA on sales bookings. Signature delivered 63% sales booking CAGR over FY21-24, largely through affordable/ mid-income housing projects. It has now forayed into premium group housing projects in prime areas of Gurugram. Given its strong launch pipeline of projects with a cumulative GDV of more than INR 400bn over FY24-27, we estimate Signature to clock 19% sales booking CAGR over FY24-27E, with sales booking ranging between INR 100-120bn annually over FY25-27E at average realisation of over INR 13,000/psf. Key risks: Slowdown in Gurugram market and inability to replenish land bank.

Outlook

We retain our BUY rating with a revised target price of INR 1,707 (earlier INR 1,705) based on 9x FY24-26E average embedded EBITDA of INR 27.9bn at an EBITDA margin of 30%. Our multiple of 9x is at 40% discount to DLF, which is its closest peer – considering Signature would need to reinvest internal accruals for land bank replenishment while DLF has the luxury of a historical low-cost land in Gurugram. On a DCF basis, we estimate Signature’s NAV at INR 130bn or INR 924/share for its current portfolio of ongoing and forthcoming projects.

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