Buy Signatureglobal (India) Ltd for the Target Rs 1,000 by Motilal Oswal Financial Services Ltd
Upcoming launches key to support presales Weak 1Q; maintain presales estimates of 13% CAGR during FY26-28E
SIGNATUR’s presales declined by 25% YoY to INR19.7b in 1QFY27 and were 10% below our estimates. It launched a branded residential project during the quarter in collaboration with Tonino Lamborghini in Sector 71, Gurugram, which supported the operational performance. The launch pipeline comprises a 17.8msf saleable area to be launched in the next 2-3 years. The company has planned launches worth INR150b and has maintained its presales guidance of INR100b in FY27. We maintain our presales expectation of 13% CAGR to INR105b during FY26-28E.
Scouting for project acquisitions for future developments
In 1QFY27, SIGNATUR added 0.1msf of projects in Sector 71 as part of business development. It incurred INR1.3b in 1Q related to land advances/acquisitions. The company is evaluating significant business development opportunities within and outside NCR. The company intends to expand through large-format, low-rise, midincome township developments in new markets. This would improve growth visibility over the medium term.
Remain watchful of the pickup in collections
Collections declined 28% YoY to INR6.7b, the lowest since 2QFY24. Despite delivering healthy quarterly presales of around INR20-30b in the last two years, collections have been declining in the past two quarters and recovery remains a monitorable item. Considering a pickup in construction and presales growth, the company has guided for 25% YoY growth in collections to INR50b in FY27. We maintain our estimate of a 17% CAGR in collections to INR55b during FY26-28E. Net debt increased by INR1.9b QoQ to INR3.9b. Factoring in cash inflows and capex requirement, we expect net debt at INR3.6b/INR4.0b in FY27/FY28.
Financial performance
Revenue declined 36% YoY to INR5.5b. The company reported EBITDA loss of INR445m vs. profit of INR332m YoY. PAT loss stood at INR165m vs. profit of INR345m YoY. The company expects revenue recognition to the tune of INR50b in FY27
Valuation and view
* The company has a concentrated exposure to the NCR market, and it is scouting for land acquisitions in other regions, which would provide diversification over the medium term. Further, it has a substantial launch pipeline for FY27-29. However, we will remain watchful of the pickup in collections in the coming quarters.
* We have valued the current residential portfolio on the DCF basis (ongoing and forthcoming).
* We reiterate BUY rating with a TP of INR1,000, indicating a 23% upside potentia
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