Target: ₹640

CMP: ₹472.40

Sunteck Realty is one of the leading real estate developers in the Mumbai Metropolitan Region (MMR), which is the largest micro-market in the country. MMR has reported 70 per cent higher absorption than pre-Covid levels.

Sunteck’s multi-micro-market presence, luxury offerings across price points, and proven execution track record have made it one of the biggest beneficiaries of the strong demand. Its three new project launches (out of the eight projects it acquired) resulted in 22 per cent pre-sales CAGR during FY18-23.

The company is likely to post 25 per cent CAGR over FY23-26 (reaching ₹3,100 crore), as it is gearing up for 2-3 new project launches. Further, Sunteck’s strong balance sheet (D/E of 0.1x), robust cash flows (cumulative OCF of ₹1,600 crore over FY23-26) and recent platform with IFC would enhance its future growth potential.

We arrive at our TP of ₹640 based on the SOTP approach. We value its residential segment based on the NPV of existing pipelines and its commercial segment based on an 8 per cent cap rate on FY25E EBITDA. We also assign ₹1,400 crore of value to future project additions through the IFC platform

Key risks: A delay in the launch of new projects; and subdued sales velocity, which would lead to a longer monetisation timeline and a lower discounted value.