Sunteck Realty Ltd - Q4 FY21 Result Report - YES Securities

(Rating: BUY, TP: Rs443, Upside: 46%)

- SRIN in FY21 shifted from POCM to PCM for revenue recognition which requires SRIN to periodically keep on completing projects to run its P&L. We believe this move is aligned with the strategy of faster execution and monetization. We estimated that company will execute Naigaon (remaining), Vasai, Vasind and Borivali with total developable area of 16.5msf in next 10years and generate free cashflow of Rs7bn (assumed Net Cashflow 25% and took 35% discount to the NPV, WACC@10%).

- SRIN has added 3 projects (Borivali, Vasai & Vasind) in asset light mode (JDA) with miniscule deposit and potential developable area of ~8msf wherein SRIN to get ~75% of total revenue and remaining is attributable to the partner, while construction cost is borne by company. We believe SRIN is a pure play on a lean balance sheet, low leverage, and execution capability which will help gain market share in a consolidating residential market.

- 'SUNTECK 3.0' strategy of asset‐light expansion, low leverage, consistent project wins, and organized and execution‐focused development coupled with recovery in residential demand, SRIN would further increase its market share. Hence, we have valued SRIN on the SoTP with residentials valued on an NPV‐based NAV approach, capturing all projects ‐ completed (Rs18.2bn), under‐construction (RS.20.4bn), planned (RS.26.1bn) and business development (RS.4.1bn). We initiate coverage on SRIN with 'BUY' rating and target price of Rs443/share (WACC 10%) implying an upside of 46% upside.

Shares of SUNTECK REALTY LTD. was last trading in BSE at Rs.302 as compared to the previous close of Rs. 301.2. The total number of shares traded during the day was 79637 in over 3451 trades.

The stock hit an intraday high of Rs. 310.15 and intraday low of 300.5. The net turnover during the day was Rs. 24334086.

Source : Equity Bulls

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