Sunteck Realty - Tactical Buy At Compelling Valuation: Yes Securities

Yes Securities Report

Sunteck Realty Ltd., at this juncture has a very lucrative valuation with strong visibility of presales from the completed/ongoing project itself. The company is expected to focus on monetising the completed inventory of Rs 18.5 billion in the BKC at a good pace to achieve its guidance.

Company plans to do new sales activation in its ongoing projects. Additionally, Sunteck Realty plans to launch the first phase of Kalyan with the potential saleable area of ~1.6 million square feet which translates in the potential sales value of Rs 12.8 billion. We believe with the current project visibility Sunteck Realty should comfortably surpass its presales guidance of Rs 20 billion for FY24E.

In Q4 FY23, Sunteck Realty pre-leased Sunteck-BKC51 (~Rs 300/sft/month) fully and expected to handover for fit-outs in August 2023. Sunteck Realty plans to pre-lease and deliver Sunteck Icon as well by Q2 FY24E. Two office assets are expected to generate annuity of ~Rs 777 million from FY25E (considering full year operations).

Company has gross debt of Rs 5.9 billion while net debt of Rs 2.8 billion and adjusted net debt/equity came down to 0.13 times as of FY23. Sunteck Realty in the last few years displayed the impeccable track record of acquiring projects and ramped up the execution capabilities post addition of Naigaon project along with efficiently managing lean balance sheet.

We believe Sunteck Realty is at a very lucrative valuation with residentials valued on net present value-based net asset value approach, capturing all projects - completed (Rs 9.7 billion), underconstruction (Rs 12.7 billion) and planned (Rs 57 billion).

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