Buy Sunteck Realty Ltd For Target Rs.664- Yes Securities
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Launches and BD key monitorable for rest of year
Our view
Sunteck Realty (SRIN) continued its strong performance and achieved presales of Rs3.33bn and collected Rs2.85bn for the Q1FY23 and reiterated guidance of Rs18bn presales for FY23E. 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 0.18x by the end of Q1FY23. SRIN has 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 in mid income and uber 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 (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 40%
Result Highlights
* SRIN reported presales of Rs3.33bn grew up by 89% y/y in Q1FY23 (while dipped 34%q/q). And Collected Rs2.85bn -29%q/q and 66% y/y. Collection efficiency stood at 81% in Q1FY23
* Presales was guided by the newly launched Sunteck Beach Residences (SBR)- Vasai, 4th Avenue-ODC and One World- Naigaon. SRIN achieved 191unit bookings for SBR in launch quarter with total value aggregating to Rs2.25bn and remaining was contributed other two projects along with commercial strata sales in PinnacleODC for Rs400mn.
* SRIN reported revenue of Rs1435mn (-8%q/q & 54% y/y) for Q1FY23 and EBITDA came in at Rs452mn (119% y/y) while margins inched up to 31.5% (928bps y/y).
* Adj. PAT for Q1FY23 came in at Rs223mn (635% y/y) and adj. profit margin was at 15%
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