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Healthy growth; momentum to continue Pre-sales grow 20% YoY in 1Q; a 25% CAGR likely over FY26-28E

Sunteck Realty (SRIN)’s pre-sales grew 20% YoY to INR7.9b in 1QFY27, which was in line with our estimates. This was fueled by the premium luxury segment, which comprised 50% of the quarterly pre-sales, followed by a 29% share of uber-luxury and a 21% share of aspirational luxury segments. SRIN’s strong launch pipeline worth INR71b, including projects at Andheri WEH, Mira Road, and additional towers in ODC, Vasai, and Naigaon, would boost pre-sales in FY27. Management expects a 25-30% pre-sales growth in the current year. The Dubai project launch (not factored in our estimates) could provide a growth delta. We model a 25% CAGR in pre-sales to reach INR49b over FY26-28E

Launch pipeline provides comfortable growth visibility

SRIN launched two towers at Sunteck Beach Residences in Vasai in 1Q and has a pipeline of INR71b to be launched during the remainder of FY27. Additionally, INR90b at the Dubai project remains launch-ready; however, the timeline is currently uncertain due to the macroeconomic environment in the region. Beyond this, it has projects with a GDV of INR182b upcoming for launch, which provides medium-term growth visibility. Further, a total investment of INR1.7b in 1QFY27 was mainly towards redevelopment projects and payments towards Napean Sea Road and Mira Road projects. In FY27, the company envisages more investments exceeding the total outlay of INR8b in FY26 towards BD, which would enhance the growth visibility

Balance sheet continues to remain sturdy on healthy NOCF generation

SRIN’s collections grew 17% YoY to INR4.1b in 1QFY27, and they are expected to improve going forward. Further, it generated a net operating cash flow (NOCF) surplus of INR1.9b in 1QFY27 (up 79% YoY), which translated to an NOCF-tocollections ratio of 47%. This ratio is among the best reported by the company. Despite the sequential rise in net debt by INR290m, SRIN’s net debt-to-equity remained low at 0.07x (excluding loans to JDA partners) due to the continued BD activity. On the back of continued pre-sales growth and healthy project execution, we expect collections to record a 23% CAGR to INR22b over FY26-28.

Valuation and view

* Given the strong performance in 1QFY27 and a healthy launch pipeline ahead, we expect SRIN to deliver a 25% presales CAGR over FY26-28. The recent project acquisitions and forthcoming BD would support growth over the medium term. Growth in collections and healthy cash flows would support business development vis-à-vis keeping leverage at healthy levels in the coming years.

* We value its residential segment at its NAV; however, although the Dubai project is launch-ready, we are currently not factoring its contribution of INR5.1b in the NAV given the uncertainty of launch in the region.

* Further, we value the commercial segment at an 8.5% cap rate.

* The stock is trading at a 45% discount to NAV (ex-Dubai project), which looks very attractive. We reiterate our BUY rating on the stock with a revised TP of INR490, implying a 69% upside potential. Inclusion of the Dubai project’s NAV, apart from the growth premium, can provide further upside.

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