Sunteck Realty Zooms 8% on Robust Sales in Mid-Income Segment

Mumbai based Sunteck Realty soared 8% to Rs 378.4 in early trade on the BSE today.

The surge was due to the announcement of strong June 2021 quarter update.

Highlights of June 2021 quarter

Sunteck Realty has reported a 74% year on year (YoY) rise in the June 2021 quarter bookings.

The booking amount was Rs 1.7 bn which was led by the performance of the company's mid-income and affordable housing projects.

Sunteck's mid-income project in Oshiwara, Mumbai was sold for Rs 760 m. While another affordable project in Naigaon, Mumbai sold for Rs 650 m.

This mid-income segment contributed around 80% to the company's total pre-sales for the June 2021 quarter.

The real estate developer's collections for the quarter grew by 165% YoY to Rs 1.7 bn.

Its collection efficiency also improved to 98% of pre-sales during the June 2021 quarter as against 64% in the same period previous year.

In fiscal 2021, the company had recorded the highest-ever collections of Rs 7.8 bn. It also reported bookings worth Rs 10.2 bn for financial year 2021.

Apart from this, the developer had also acquired three new projects under an asset-light strategy totalling to 8 m sq. ft.

These are in Vasai, Vasind, and Borivali in Mumbai Metropolitan Region (MMR).

Looking forward

Additionally, the company is confident of achieving around Rs 15 bn in presales in fiscal 2022. This will improve its collection efficiency.

Commenting on the performance, Kamal Khetan, Chairman & Managing Director, Sunteck Realty said,

• In the quarter gone by, we continued our strong momentum in operational performance.
  
  Both pre-sales and collections witnessed sturdy growth along with high collections efficiency.
  
  The industry consolidation is leading to a rise in the share of business for organized developers and Sunteck will be one the biggest beneficiaries of this trend.
  We increase our presale estimates by 12% for the financial year 2022. While we increase the estimates to 9% for the financial year 2023.
  
  We like the stock being on the ramp-up for its mid-income and affordable housing portfolio.

The company's core strength of sales and marketing and in-house construction capabilities helps it to sustain the robust pre-sales and collections trends.

Apart from these factors, the company is also among the key beneficiaries of the ongoing consolidation in the real estate sector.

Listed companies in this segment are expected to gain market share from smaller and regional players who are struggling to meet their working capital requirements.

Equitymaster's technical view on the realty sector

We reached out to Brijesh Bhatia, Research Analyst at Equitymaster, and editor of the premium monthly recommendation service Fast Profits Report, for his technical view on the realty sector.

Here's what he has to say...

• First metals, then cement, and now the realty is breaking out of multi-year bearish trends, indicating the frequent sector rotations in this bull market.
  
  With the lower interest rates on loans and revised ticket size in real estate investment trust's (REIT) investment, the liquidity is likely to flow into this sector.
  
  Realty index has broken out of the decade old range of 140-350 to build the skyscraper on charts, the price rally.
  
  On the short-term (daily) chart, the index has broken out of the cup and handle pattern which confirms the bullish breakout.
  
  We expect the breakout to play well and expect a fast and furious rally like metals and cement.
  
  Realty index is underperforming against Nifty since 2008 and Nifty trading at all-time high, possess a risk for realty index.
  
  The bullish structure might negate if the index moves back below 300 and trades in the decade range.

For more detailed updates, you can check the latest real estate / construction sector results.

How the market reacted to Sunteck Realty's performance

Sunteck Realty opened at Rs 363.5 on the NSE against its previous close of Rs 349.4.

The price then soared up by 8.4% to Rs 379.2 in early trade.

On the BSE the stock opened at Rs 367.5 and zoomed by 8.5% to Rs 378.4.

However, shares of the company erased gains as the session progressed and closed at Rs 358.7 on the BSE.

On the NSE the stock closed at Rs 358.9.

The S&P BSE realty index ended at 3,033 (up 0.5%).

Within the realty sector, the top gainers today were Mahindra Lifespace (up 4.6%) and Sunteck Realty (up 2.4%). On the other hand, Indiabulls Real Estate (down 2.3%) and Sobha (down 0.6%) were among the top losers.

Over the past one year, shares of Sunteck Realty have gained 85.7%.

About Sunteck Realty

Sunteck Realty is a Mumbai-based real estate and construction company.

It's engaged in construction, development, and management of commercial and residential properties.

The company is known for its high-end residential properties which are classified under different brand names: Signature for ultra-luxury properties, Signia for luxury properties and City for mid-segment properties.

The company was set up by Kamal Khetan in 1981. In March 2009, it entered into a partnership with Oman based WJ Towell Group and Piramal Group.

It also formed a 51:49 joint venture in 2009 with Bank of Muscat for developing real estate projects in Oman.

The company has been listed as a Fortune Next 500 company for the year 2017, 2018, 2019, and 2020.

For more details about the company, you can have a look at Sunteck Realty's fact sheet and Sunteck Realty's quarterly results on our website.

You can also compare Sunteck Realty with its peers on our website:

Sunteck Realty vs DLF

Sunteck Realty vs Godrej Properties

Sunteck Realty vs Eldeco Housing

Sunteck Realty vs Emami Realty

Sunteck Realty vs Ahluwalia Contracts

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...