Buy Sunteck Realty; target of Rs 640: Motilal Oswal

Motilal Oswal's research report on Sunteck Realty

In 9MFY24, Sunteck reported pre-sales of INR12.4b, up 16% YoY, largely on the back of pick-up in bookings at its uber-luxury projects in BKC as well as its aspirational project in Naigaon. In 3QFY24, Sunteck launched an aspirational project in Kalyan, unveiling a tower with a saleable value of INR3-3.5b. Within just a month, INR0.7b or 20-25% of the total value, was booked. This contributed seven ppts to the overall performance for 9MFY24. The contribution from Kalyan is expected to increase as 4Q will witness the first full quarter of operation. Additionally, the company plans to launch a third tower at Mira Road, with a GDV potential of INR5-6b. This is expected to receive strong response on the back of healthy traction in the first two towers. That, coupled with sustained traction at existing projects, will lead to bookings of INR6.5-7.5b in 4QFY24, taking the full-year sales to INR19-20b, up 20-25% YoY, and in line with management guidance.

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 a 33% upside potential.