Target: ₹1,436

CMP: ₹1,083.35

Signature Global (SGIL) has built up a robust pre-sales momentum (TTM bookings up about 7.6x over FY21–9m-FY25), notable presence in the supply-constrained Gurugram market (unsold inventory only about 10 months) and a capital-efficient business model (among lowest capital employed/unit of pre-sales).

Judicious land acquisition has ensured its land cost is merely 10–15 per cent of pre-sales value. Hence, its cash operating margins are at a healthy 35 per cent level, and can potentially reach about 40 per cent.

SGIL’s net debt/TTM operating surplus was about 0.5 times at end-Q3FY25. Given the company’s bookings are likely to surpass ₹10,000 crore in FY25, we believe it shall have to step up its land capex to replenish its land bank. Nevertheless, a rising collections trajectory and improving profitability imply that free cash flow shall continue to rise.

The ongoing realty upcycle and SGIL’s successful transition to the premium housing segment shall help it clock a pre-sales CAGR of 21 per cent over FY25–27E. Potential entry into Noida/Delhi shall be a re-rating trigger in our view. Initiate at ‘Buy’ with a TP of ₹1,436 (at 20 per cent premium to NAV).

Slowdown in the Gurugram market is a key risk.

Published on March 18, 2025