Sunteck Realty - Building Foundations In MMR: Prabhudas Lilladher Initiates Coverage With A 'Buy'

Prabhudas Lilladher Report

We initiate coverage on Sunteck Realty Ltd. with ‘Buy’ rating and discounted cash flow based net asset with target price of Rs 565/share, 42% upside from current levels.

Sunteck Realty, with its proven ability to market ultra-luxury projects, aggressive and multipronged land acquisition capabilities in various micro markets across Mumbai Metropolitan Region is an interesting play on Mumbai’s high real estate market.

We expect company pre-sales to grow two times over next three years aided by ongoing projects and strong new launches pipeline. Further given likely strong cash flow generation (Rs 8-10 billion over FY23-26E), we see Sunteck Realty to step up new project additions which will be a key catalyst for stock performance.

Adoption of asset light model has enabled the company to acquire scale without straining its balance sheet and this will likely continue in new project additions too.

We expect revenue/Ebitda compound annual growth rate of ~83%/123% over FY23-26E.

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