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New launches, Dubai entry elevate Sunteck Realty’s pre-sales outlook
Summary
- Sunteck is eyeing over 30-35% y-o-y pre-sales growth in FY25, backed by new launches even though there were no new launches in Q1.
MUMBAI : The odds are gradually turning in the favour of Mumbai-based Sunteck Realty Ltd. In 2024, the stock has gained 40%, beating the Nifty Realty index.Increased traction in existing and recently completed projects is driving momentum.Pre-sales or bookings in the June quarter (Q1FY25) rose 30% year-on-year (y-o-y) to ₹502 crore, led by the high-end Bandra Kurla Complex (BKC) project and Naigaon Maxx World project, which is priced at a relatively lower-end.
Sunteck is eyeing over 30-35% y-o-y pre-sales growth in FY25, backed by new launches even though there were nonew launches in Q1. However, projects worth ₹5,000 crore are set to be unveiled in the rest of the year. This includes new phases/towers at Naigaon, Sky Park (Mira Road), Beach Residency (Vasai),Avenue 5 (Oshiwara District Centre)and Crescent Park (Kalyan).
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Sunteck goes international
A bigger takeaway from Q1FY25 is Sunteck's entry into the international market.It resolved a long-pending legal dispute with a joint venture (JV) partner, Grand Valley General Trading Llc.Both parties have formed a new development company, Sunteck Mas Real Estate Development Llc, and will be launching a luxury project in Downtown Dubai.This project's estimated gross development value is around ₹9,000 crore, with a total development potential of around 1 million square feet. This JV is a 50:50 (profit-share) between the two parties, and this project is expected to be launched within the next 12-15 months.
“The company has lagged peers in terms of pre-sales performance due to delayed launches and slower sustenance sales, although it has seen some improvement in the past two quarters," said Kotak Institutional Equities. The launches of new phases at existing projects and fresh launches at Nepean Sea Road and Dubai should aid pre-sales of ₹2,600 crore and ₹3,500 crore in FY25 and FY26, added the Kotak 18 August report. Sunteck’s pre-sales in FY24 stood at ₹1,915 crore.
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Just depending on Mumbai won't do
Sunteck’s asset-light model has kept its balance sheet in good shape with a net cash surplus of about ₹39 crore. Strong collections of ₹340 crore in Q1FY25 also gave cash flowsa fillip. Meanwhile, Sunteck has ₹1,200-1,300 crore of completed inventory (mostly at BKC) and ₹1,600-1,700 crore of under-construction inventory.The pace of exhausting inventory is crucial here as large unsold inventory could weigh on its realizations outlook.
Further, the management is exploring western suburbs and South Mumbai geographies for more project additions. High dependence on one market, in this case, the Mumbai Metropolitan Region, could impact growth if sales taper in that market. Thesepotential downside risks can spoil the party for the Sunteck stock.
