Buy Sunteck Realty; target of Rs 640: Motilal Oswal

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Motilal Oswal's research report on Sunteck Realty

Sunteck Realty Ltd. (Sunteck) 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% 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% pre-sales CAGR during FY18-23. The company is likely to post 25% CAGR over FY23-26 (reaching INR31b), 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 INR16b over FY23-26E) and recent platform with IFC would enhance its future growth potential.

Outlook

We arrive at our TP of INR640 based on the SOTP approach, indicating 41% upside potential. We initiate coverage with a BUY rating.

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Sunteck Realty - 21 - 11 - 2023 - moti