ICICI Securities

Target: ₹1,705CMP: ₹1,409

We initiate on SignatureGlobal India (Signature) with a Buy rating and a target price of ₹1,705, valuing the company at 9x FY24-26E average embedded EBITDA on sales bookings. The Gurugram-based, NCR residential developer has a lean banking business model boasting rapid conversion from acquisition to delivery, enabling it to channel internal accruals for future growth. Signature delivered 43 per cent sales booking CAGR over FY21-23, largely through affordable/mid-income housing projects. It has now forayed into premium group housing projects in prime areas of Gurugram. Given its strong launch pipeline of projects with a cumulative GDV of more than INR 400bn over FY24-26E, we estimate that Signature may clock 38 per cent sales booking CAGR over FY23E-27E with sales booking ranging between ₹10,000-12,000 crore annually over FY25-27 at average realisations of over ₹13,000/psf-plus. Our multiple of 9x is at a 40 per cent discount to DLF, its closest peer – considering Signature would need to reinvest internal accruals for land bank replenishment while DLF has the luxury of historical low-cost land in Gurugram.