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Maybank Kim Eng
Sunteck Realty (Buy)
CMP: ₹263.15
Target: ₹427
Promoted by Kamal Khetan, first-generation entrepreneur backed by Kotak Group (6.5 per cent) and Piramal Group (4.6 per cent), Sunteck Realty is a Mumbai-focused developer, with unrecognised presales equivalent to 2.2x FY16F revenue. These are from high-margin housing units at three Bandra Kurla Complex (BKC) projects. Its BKC and Goregaon properties make up 75 per cent of our RNAV. Demand for BKC projects, which are close to completion, is expected to be strong. Along with the commencement of construction of its Goregaon projects, we expect Sunteck’s presales to rise 60 per cent y-o-y in FY16 and 50 per cent y-o-y in FY17. These are expected to boost its cash flows and back net-profit growth of 125 per cent on average through FY18. Among Indian developers with large backlogs, Sunteck stands out for its strong balance sheet.
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