Sunteck Realty Q2 Results Review - Existing Engines Delivering A Mixed Show: Dolat Capital

Dolat Capital Report

Sunteck Realty Ltd.'s headline presales retained its sustainable quarterly run-rate of Rs 4 billion (up 17% YoY; flat QoQ) aided by the uber luxury (BKC) back in action (two units sold).

Notably contribution from the high mid income projects declined to less than 50% versus 78% last Q on account of relatively muted sales in Oshiwara District Centre and Sunteck Beach Residences.

Drop in collections to Rs 2.1 billion (down 26 % QoQ) is attributable to presales skewed to the end of the quarter.

Sunteck Realty's growth is set to accelerate in the med-term:

1. Two planned launches from existing landbank – Kalyan (gross development of ~Rs 90 billion) and Nepean Sea road (GDV of Rs 25 billion). This will strengthen Sunteck’s positioning in both affordable and uber luxury segments.

2. Joint platform with IFC of upto Rs 7.5 billion will aid business development activity in the affordable-mid income segments; garnering a GDV potential of Rs 80-100 billion.

Retain ‘Accumulate’ with a revised target price of Rs 500 as we roll forward to March-25. Note that our net asset valuation remains conservative as we assign no to non-core land assets (Jaipur, Dubai).

Consistency in faster turnaround of projects from acquisition to launch (Mira road: six months) and showcasing the ability to sustain gas in all growth engines together will be key for turning more constructive.

Key upside risks to target price and rating include:

1. Faster than anticipated launch of projects,

2. new high acquisitions in markets having limited competition from grade A developers and

3. non-core land monetisation.

Key downside risks include:

1. joint development agreement cancelations,

2. delay in project launches and

3. weaker than anticipated presales.

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