Sunteck Realty’s (SRIN) Q2FY19 operating performance was boosted by the launch of the Westworld affordable housing project at Naigaon in Mumbai’s extended western suburbs during the quarter. After its fund-raise in H2FY18 through the QIP route and promoter fund infusion, SRIN has a low net D/E of 0.2x and has also rejigged its strategy by advancing monetisation of its Goregaon ODC land parcel by building annuity assets.
Hence, SRIN offers a mix of exposure to luxury housing (BKC), premium housing (Goregaon ODC), annuity assets (Goregaon ODC) and affordable housing (Naigaon JDA land parcel). Accordingly, we retain our ‘buy’ rating on SRIN with an unchanged target price of Rs 541, valuing the firm on 1x FY19E NAV of Rs 541 per share, including Rs 62 per share for the value of the Naigaon affordable housing land parcel.
SRIN reported Q2FY19 sales bookings of Rs 4.2 billion (up 2.5x year-on-year) and collections of Rs 1.4 billion (down 3% y-o-y), which were driven by sales bookings at its Naigaon where SRIN sold 1,015 units worth Rs 3.2 billion with balance coming mainly from BKC projects (Rs 1.0 billion). SRIN has continued a strong sales momentum in Naigaon after September 2018 with another 1,000 units of sales and cumulatively sold ~2,000 of the 2,475 units launched in the project for over Rs 6 billion.
We expect sales momentum to continue in H2FY19 on the back of renewed activations in ODC, Goregaon, and Signia High, Borivali projects. The management has maintained guidance for sales volumes of 150-200 units in FY19E from its ongoing Avenue 1 and 2 projects at ODC and is also planning to launch Avenue 3 and 4 residential project at ODC, Goregaon in H2FY19.
