Buy Sunteck Realty Ltd For Target Rs.577 - Yes Securities
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Launches critical for targeted presales growth in FY24
Our view
Sunteck Realty (SRIN) continued its strong performance and achieved presales of Rs3.96bn and collected Rs3.04bn for the Q3FY23 and reiterated guidance of Rs18bn presales for FY23E. SRIN plans to launch one of the two projects from Kalyan or Mira Road along with the new activation in Vasai. And cumulatively till FY24E company plans to launch ~7.5msf which will guide to achieve 25-30% CAGR. Management reiterated, SRIN will continue to aggressively vouch for lucrative opportunities in market for Business Development (BD) in next 12-18months supported by the best-in-class B/S with leverage as low as 0.14x by the end of Q3FY23.
SRIN has impeccable track record of acquiring projects to the tune of 38.5msf in last 3years (~25.5msf in covid phase) and we expect it will continue to aggressively scout for business development opportunities with higher margin profile projects in mid income and luxury segment which will drive the valuation going ahead along with the steady and timely execution of projects. Hence, we have valued SRIN on the SoTP with residentials valued on an NPV-based NAV approach, capturing all projects - completed (Rs14bn), under-construction (RS.12bn), planned (RS.57bn) and business development (RS.7bn). We retain our ‘BUY’ rating with a revised target of Rs577/share and an upside of 66%.
Result Highlights:
* SRIN reported presales of 0.35msf translates in value of Rs3.96bn grew by 13% y/y in Q3FY23 and up by 18%q/q. And collection witnessed growth of 13%y/y and 16% q/q to Rs3.1bn. Collection efficiency shot up to 77% in Q3FY23.
* Presales guided by the sales of 4th Avenue, ODC upper floors, Sunteck Beach Residencies (SBR) Vasai, and sustained sales in Naigaon Three projects’ accounts for 90% of total presales.
* SRIN reported revenue of Rs893mn (10.6%q/q & -30.3% y/y) for Q3FY23 and EBITDA came in at Rs180mn (79.9%q/q & -48.1% y/y) with margins of 20.2% (777bps q/q & -692bps y/y).
* Adj. PAT for Q3FY23 came in at Rs21mn (-11.3% q/q & -81.4% y/y) and Adj. profit margin was at 2.3%.
* SRIN is geared up to launch ~7.5msf by FY24E which will guide the company to achieve targeted growth of 25-30%CAGR (presentation). And beyond FY24E company has robust pipeline of 29.9msf
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