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All eyes on festive season

Sunteck Realty’s (SRIN) clocked healthy sales bookings of Rs2.7bn in Q2FY22 (up 36% YoY) along with quarterly collections of Rs2.1bn (up 47% YoY). With sales momentum sustaining for completed/launched inventory, SRIN has done a soft launch for its Vasind project in Sep’21 and is targeting to launch the Naigaon Phase III and Vasai projects in H2FY22 which is expected to boost sales in FY22- 23E. We maintain our BUY rating on SRIN with an unchanged target price of Rs590/share based on 1x FY22E NAV incorporating project level adjustments. Post the recent Shahad project addition, the company has a significant presence in peripheral areas of MMR with 11.8msf of area in MMR’s extended Western suburbs and 12.6msf in MMR’s extended Eastern suburbs. Key risks to our call are slowdown in the Mumbai property market volumes and fall in residential/commercial prices.

* Resilient show in a tough environment: SRIN’s Q2FY22 sales bookings of Rs2.7bn were up 36% YoY which we estimate has been driven by continued momentum in ODC, Goregaon, Naigaon and other projects. SRIN also achieved healthy quarterly collections of Rs2.1bn in Q2FY22 (up 47% YoY). In Sep’21, the company also did a soft launch for its Vasind project christened “Sunteck Forest World”. As per company, out of the total 4,000 units in the project, ~1,000 units consisting of 500 1BHKs (carpet area of 380sft) and 500 2BHKs (carpet area of 500sft) have been launched with ticket sizes for 1BHKs starting from Rs2.3mn and 2BHKs starting from Rs3.1mn which implies potential sale value of over Rs2.7bn in Phase 1 of this project.

* All eyes on festive season: As of Sep’21, with unsold inventory of ~Rs11bn in Goregaon (~Rs8bn in Avenue 4 and balance in completed Avenue 1 and 2 phases) and ~Rs4bn in Naigaon (gross amount), SRIN’s execution progress will enable faster monetisation of inventory over H2FY22-23E. Apart from these, we believe that the targeted launches of 2.5msf in new projects (Vasai/Vasind/Borivali/Shahad) over the next 12-18 months will enable sustained sales momentum for the company.

* Shahad project addition cements SRIN’s position in MMR’s extended suburbs: SRIN has announced plans to develop a residential township spread over 50 acres with saleable area of 10msf at Shahad, Kalyan located in MMR’s extended Eastern suburbs. The new project has been acquired under the asset light Joint Development (JDA) revenue share model with ~75-80% of revenues to accrue to SRIN with 100% of construction costs to be borne by SRIN. SRIN now has a significant presence in peripheral areas of MMR with 11.8msf of area in MMR’s extended Western suburbs (7.3msf in Naigaon and 4.5msf in Vasai) and 12.6msf in MMR’s extended Eastern suburbs (2.6msf in Vasind and 10.0msf in Shahad).

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