Sunteck Realty rating – Buy: Operationally strong Q4FY21 for company

By: |
July 05, 2021 3:45 AM

More affordable projects and low leverage are positives; TP up to Rs 360; ‘Buy’ retained

Maintain Buy with revised FV of Rs 360/share (from Rs 345/share earlier).

Sunteck reported improved sales of Rs 3.7 bn (6% y-o-y) against collections of Rs 3.2 bn in Q4FY21 with a marked change in sales profile from luxury segment in BKC to more affordable and mid-income segments. Sunteck Realty has (i) low leverage – 0.18X net debt/equity as of March 2021; (ii) no land bank; and (iii) has been aggressively expanding its portfolio across lower-ticket projects in suburban Mumbai. We do concede weak sales for high-ticket units in BKC, although note the increasing contribution from projects with a more affordable ticket size. Maintain Buy with revised FV of Rs 360/share (from Rs 345/share earlier).

Mid-income and affordable housing segment contributed 68% of sales in FY2021: Sunteck recognised revenues of Rs 1.9 bn (-7% q-o-q), Ebitda of Rs 391 mn (-13% y-o-y) and PAT of Rs 159 mn (-25% q-o-q), with an Ebitda margin of 20.5% in an operationally strong Q4FY21. In FY2021, Sunteck reported revenues of Rs 6.1 bn, Ebitda of Rs 1.4 bn and PAT of Rs 536 mn with Ebitda margin of 22.3%.

New launches at recently acquired JD projects to accelerate sales: Sunteck has added a slew of JDA projects (totaling ~8 mn sq. ft) over the past year. It is planning to launch phases across Vasai, Vasind and Borivali (~Rs 4-5 bn each) in FY2022/ 23 in order to maintain sales momentum achieved in FY2021.

Maintain Buy: We note that (i) launches of new mid-income projects, (ii) sustenance sales from new phases of extant projects, as well as (iii) clarity on surplus land in Oshiwara will act as a key catalyst for the stock, notwithstanding impact of Covid on sales .

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Sebi mulls measures to improve liquidity in ETFs
2Sebi in process of finalising modalities to set up backstop facility for corp debt market
3Sensex, Nifty scale fresh highs for third day straight; here’s what experts make of today’s trade