Buy Sunteck Realty; target of Rs 640: Motilal Oswal

Motilal Oswal's research report on Sunteck Realty

Sunteck Realty (SRIN) reported 3QFY24 pre-sales of INR4.5b, up 15% YoY/ QoQ each (in line). For 9MFY24, bookings stood at INR12.4b, up 16% YoY.  Including the proceeds from the recent stake sale, collections rose 44% YoY and doubled sequentially to INR4.4b. For 9MFY24, collections remained flat at INR9.4b, and SRIN generated a net surplus of INR2b during this period.  Its Uber luxury projects at BKC generated sales of INR840m (vs. nil in 3QFY22), while the upper mid-income projects recorded a 39% decline in bookings to INR1.8b. However, the lower mid-income projects posted strong bookings of INR1.4b, up 113% YoY. Aided by strong surplus cash, the net debt reduced to INR490m in 3Q from INR2.6b in 2QFY24.

Outlook

We value its residential segment based on the NPV of existing pipelines and its commercial segment based on an 8% cap rate on FY25E EBITDA. We also assign INR14b of value to future project additions through the IFC platform to arrive at our TP of INR640, indicating 42% upside potential.