Sunteck Realty’s Q3FY17 numbers were driven by sales recognition in Signia Isle. While demonetisation hurt new sales during the quarter, we expect them to revive in ensuing quarters. SRL remains focused on executing ongoing projects and selling balance BKC inventory. Also, its new launch plans remain intact. These should lead to operations scale up and imparts strong cash flows visibility going ahead. Hence, maintain ‘buy’ with revised target price of R360 as we roll over to FY18E NAV of R514.
Q3FY17 revenue came at R837 million (up 9% y-o-y, down 59% q-o-q; down 41% q-o-q ex-Mulund land sale in Q2FY17) driven by 100% recognition of new sales in Signia Isle during the quarter (R608mn) and POCM based revenue recognition in Signia Pearl. EBITDA margin at 41% expanded 24 percentage points (ppt) y-o-y and compressed 20ppt q-o-q (4ppt q-o-q ex-Mulund land sale). Net profit came at Rs 178 million (up 231% y-o-y, down 81% q-o-q / down 56% ex-Mulund sales) versus our estimate of R201 million.
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Goregaon future phase launches and sales pick up in Goregaon & BKC projects are key stock catalysts. The stock is currently trading at attractive valuations – 51% discount to our FY18E NAV estimate of R514/share.We have rolled forward our NAV to FY18. Our new FY18 NAV estimate is R514/share (earlier R493) to which we apply 30% discount (unchanged) to arrive at our new target price of R360 (earlier R345).
