Buy Sunteck Realty Ltd for the Target Rs 450 by Prabhudas Liladhar Ltd
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Strong launch pipeline to aid growth
Sunteck Reality (SRIN) reported healthy pre-sales growth of 17% YoY, along with 12% YoY collection growth in Q2. SRIN’s proven ability to market ultra-luxury projects, aggressive and multi-pronged land acquisition capabilities in various micro markets across Mumbai Metropolitan Region (MMR) is an interesting play on Mumbai’s high value real estate market. We expect the company’s pre-sales to grow to +20% CAGR over FY26-28E, supported by launch acceleration, including the planned Dubai JV project in FY28. Further given likely strong cash flow generation, we see SRIN to step up new project additions which will be a key catalyst for stock performance. Maintain ‘Buy’ rating with TP of INR 450/share; 15% discount to our 1-year forward NAV.
In line quarter; strong YoY & QoQ revenue growth:
Operationally, SRIN reported EBITDA of INR 886mn vs INR 778mn in Q2FY26; in line with our estimates with EBITDA margins declining by ~320 bps YoY to 27.6%. For H1, EBITDA increased ~23% YoY to INR 1.6bn, with OPM at 30.4% (up 175bps YoY). Consolidated revenues increased by 27% YoY to INR 3.2bn. H1 revenues stood at INR 5.1bn; up ~16% YoY. Adj PAT increased by 19% YoY to INR 582mn in Q2. H1 adj PAT stood at INR 1bn, up ~22% YoY. During the quarter, the company reported net debt of INR 4.2bn; increased by INR 1.3bn QoQ.
Healthy pre-sales despite the absence of new launches:
SRIN’s pre-sales improved 17% YoY to INR 8.2bn; in line with our estimate led by sustained traction across ongoing projects. Overall, Premium luxury contributed 50% (~INR 4.2bn) to the pre-sales, while uber luxury and aspirational luxury contributed 25% (~INR 2bn) to total pre-sales in Q2FY27. Average realizations in Q2FY27 increased 22% YoY & 3% QoQ to INR 20,555 psf. Collections rose 12% YoY to INR 3.7bn. In H1FY27, Net OCF surplus rose 27% YoY to INR 3.5bn, funding ~90% of the INR 3.9bn BD investments during the period. Net OCF during the quarter stood at INR 1.5bn; down 7% YoY.
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SEBI Registration number is INH000000933
