Sunteck Realty Recommended by ICICI Securities and Axis Capital

Sunteck Realty has been recommended by three brokerages. The company has been showing good sales record for its apartments. Brokerages have raised priced target for Sunteck Realty considering future sales growth expectations.

ICICI Securities: We retain our BUY rating on SRIN with a revised target price of Rs513/share. We like SRIN because it: (1) enjoys strong brand recall in Mumbai, (2) has strong balance sheet with net debt of 0.2x, and (3) rejigged strategy of advancing monetisation of its Goregaon ODC land parcel by building annuity assets.

Edelweiss Report - Maintain ‘BUY’ with revised target price of INR452. Sunteck Realty’s (SRL) Q3FY19 new sales surged 199% YoY to INR3.1bn. This was led by INR1.3bn sales (~INR4.5bn till Q3FY19 end) in the Naigaon affordable housing project launched in Q2FY19. Sales in BKC projects (~INR1.1bn, up 66% YoY) also contributed to the ramp up. Pick-up in sales in BKC and ODC projects are key drivers of the stock, in our view.

Axis Capital – Q3 pre-sales at Rs 3.1 bn (vs. Rs 4.2 bn in Q2) was mainly due to lower bookings (based on apartment registration) of 381 units in Naigaon project (1,015 units in Q2); it has more than 600 units yet to be booked (has sold >2,000 units). BKC sales remained steady at ~Rs 1.1 bn. While sales at ODC^ were muted, management expects strong response to its activation in Q4. While collections were steady QoQ at Rs 1.5 bn, it is yet to catch up with sales run-rate. Management expects collections to ramp up significantly over next 3-4 quarters driven by strong sales in 9MFY19. We like Sunteck due to its brand, diversified product portfolio and strong balance sheet (net D/E of 0.17x) – well placed to capitalize on industry consolidation. Maintain BUY, Target Price Rs. 424.




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