Sunteck Realty Q2 Results Review - Steady; New Launches, Project Additions To Step Up: Prabhudas Lilladher

Prabhudas Lilldher Report

Sunteck Reality Ltd. reported healthy pre-sales of Rs. 4 billion; increased 17% YoY and 2% QoQ driven by high mid-income projects. However, collections declined by 26% QoQ as large part of sales were executed towards end of the quarter.

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

We expect Sunteck’s 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 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.

Maintain ‘Buy’ rating with a target price of Rs. 565/share.

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