Sunteck Realty Gets Equirus' 'Long' Term Initiation On Strong Value Creation

Equirus Equities initiated coverage on Sunteck Realty Ltd. with a price target of Rs 543 and a long-term bullish stance on the company.

"Sunteck Realty, a top-tier Mumbai developer, stands out for its asset-light strategy and luxury focus. From BKC to Nepean Sea Road, it has built a strong track record of value creation through smart capital allocation", the brokerage stated.

As per the research firm, Sunteck's Gross Development Value stands at Rs 39,370 crore, besides having a diverse residential portfolio which includes ultraluxury, premium, and aspirational segments and caters to more than one economic strata.

Apart from housing, the real estate firm also owns two commercial assets in BKC, generating annuity income of Rs 70 crore, it noted. The annuity income, too, is likely to grow five times over the next 4-5 years, supported by strategic additions in Goregaon.

"A lean balance sheet and Joint Venture-led growth model provide ample growth headroom...we derive comfort from SRIN’s strong pipeline in the high-growth Mumbai Metropolitan Region, a healthy annuity portfolio, and a debt-free balance sheet," said Equirus.

The company is targeting 25% pre-sales growth. It made strategic inroads into key micro-markets with high commercial value, like BKC and Goregaon and underpenetrated residential zones like Vasai and Borivali, which gave it an edge over peers, remarked Equirus.

"Its asset-light approach (minimal capital exposure) and multi-brand portfolio (uber luxury to aspirational housing), have created strong value for stakeholders, driving a 23% pre-sales Compound Annual Growth Rate over FY18-FY25," the research firm added.

The brokerage projects that Sunteck Realty is well-positioned to capitalise on the real estate upcycle.

Execution risk, geographical concentration, slowdown in real estate cycle and changes in interest rates are some hurdles the company may face, according to Equirus.