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ICICI Securities
Suntech Realty (Buy)
Target: ₹590
CMP: ₹503.95
As per Sunteck Realty’s (SRIN) operations update, the company clocked healthy sales bookings of ₹2.7 billion in Q2FY22 (up 36 per cent YoY) along with quarterly collections of ₹210 crore (up 47 per cent YoY). With sales momentum sustaining for completed and launched inventory, SRIN did a soft launch of its Vasind project in Sep’21 and is targeting to launch the Naigaon Phase III and Vasai projects in H2FY22 which is expected to boost sales in FY23.
We maintain our Buy rating on SRIN with a revised target price of ₹590/share (earlier ₹580) based on 1x net asset value incorporating project level adjustments. Post the recent Shahad project addition, the company has a significant presence in peripheral areas of the Mumbai Metropolitan Region (MMR) with 11.8 msf of area in MMR’s extended Western suburbs and 12.6 msf in MMR’s extended Eastern suburbs.
We like SRIN because it enjoys strong brand recall in Mumbai, has a strong balance sheet with net debt of 0.2x, and maintains an asset-light model of land acquisition in MMR. Key risks to our call are a slowdown in Mumbai property market volumes and a fall in residential and commercial prices.
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