Target: ₹2,000
CMP: ₹1,393.05
Signature Global, with its strong presence in strategic locations in Gurugram, is on track to capitalise on the ongoing demand, guided by a strong project pipeline of 24.3msf.
With a projected 35 per cent CAGR growth in pre-sales over FY24-27, the company is set to cumulatively collect ₹28,500 crore. Its strategic shift from the affordable to mid/mid-premium segment is expected to drive a strong cumulative OCF of ₹9,500 crore. This will enable the company to turn net cash positive and reinvest in land to fuel future growth.
Currently, Signature is executing around 51msf of projects, with 25.3 msf underway and 25.4 msf in forthcoming projects that are set to be launched in the next 12-24 months. Based on the NPV method, we value Signature’s existing project pipeline of about 30msf (includes recent launch) at ₹15,000 crore. Thus, the current valuation implies 34 per cent of the going concern premium for the company, indicating that a significant portion of the future growth potential is yet to be accounted for.
We reiterate Buy with a TP of ₹2,000.
Key risks include: a slowdown in residential absorption, a delay in the monetisation of forthcoming projects, and slower BD convergence.