Buy Sunteck Realty Ltd For Target Rs.664 - Yes Securities
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Launches key to achieve the guidance
Our view
Sunteck Realty (SRIN) achieved it best ever presales of Rs13.03bn for the FY22 and guided for presales of Rs18bn for FY23E with 35-40% contribution from new launches. Management reiterated that SRIN will continue to aggressively vouch for lucrative opportunities in market for BD in next 12-18months supported by the best in class B/S with leverage as low as 0.19x by the end of FY22. SRIN is also focusing to strengthen its in-house execution capabilities by building the construction management team which will lead to cost savings. We believe SRIN will leverage its brand equity and continue to aggressively scout for business development opportunities with higher margin profile 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 (Rs15.7bn), under-construction (RS.14.3bn), planned (RS.62.9bn) and business development (RS.8.5bn). We maintain our ‘BUY’ rating with target of Rs664/share and an upside of 47%.
Result Highlights
▪ SRIN reported presales of Rs5.03bn grew up by 43% q/q and 36% y/y in Q4FY22, which is the highest ever achievement for the year. And Collected Rs4.04bn up 50%q/q and 26% y/y.
▪ For FY22, the presales grew by27% y/y to Rs13.03bn which is the highest ever presales for the year achievement. Also, collections grew up by 35% y/y to Rs10.53bn, also highest ever achievements for the year. And collection to presales ratio is 81% for FY22.
▪ SRIN reported revenue of Rs5131mn (-16% y/y) for FY22 and Rs1560mn (22% q/q and -18%y/y) for Q4FY22. EBITDA came in at Rs953mn (-30% y/y) while margins dipped to 19% due to higher other overheads for FY22.
▪ Adj. PAT for FY22 came in at Rs251mn (-40% y/y) and adj. profit margin was at 5%.
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