Up 70% in 6 months! Here’s why Motilal Oswal sees 30% upside in this realty stock

Shares of Sunteck Realty have delivered over 70 per cent return in the past six months. According to Motilal Oswal, the upward momentum is likely to continue going forward aswell.

The brokerage firm has initiated its coverage on the realty stock with a ‘Buy’ rating and a target price of Rs 640, indicating an upside potential of over 30 per cent. The stock was trading at Rs 493.15 on BSE at 14:02 hours.

“Sunteck’s multi-micro-market presence, luxury offerings across price points, and proven execution track record have made it one of the biggest beneficiaries of the strong demand. Its three new project launches (out of the eight projects it acquired) resulted in 22 per cent pre-sales CAGR during FY18-23,” said Motilal Oswal.

“The company is likely to post 25 per cent CAGR over FY23-26, as it is gearing up for 2-3 new project launches. Further, Sunteck’s strong balance sheet, robust cash flows and recent platform with International Finance Corporation (IFC) would enhance its future growth potential,” it added.

However, a delay in the launch of new projects and subdued sales velocity could lead to a longer monetization timeline.

Recently, Jefferies also raised the price target of the stock to Rs 555 from Rs 415. According to the international brokerage firm, Sunteck's deal with IFC comes as a boost to perceived corporate governance for the company. The platform, alongside any affordable housing policy benefits, raises visibility on growth and land monetisation.

In September 2023, Sunteck Realty partnered with IFC to create a joint platform with a total investment of up to Rs 750 crore. The investment will be towards development of nearly 12,000 housing units across 4-6 green housing projects.

About the company

Sunteck Realty Limited (SRL) is one of the Mumbai-based luxury real estate development companies. The company focuses on a city centric development portfolio of about 52.5 million square feet spread across 32 projects.

It has differentiated its projects under six brands - ‘Signature’: Uber luxury residences, ‘Signia’: Ultra luxury residences, ‘Sunteck City’ & ‘Sunteck Sky Park’: Premium luxury residences, 'Sunteck Beach Residences': Marquee Luxury Destination, ‘Sunteck World’: Aspirational luxury residences, ‘Sunteck’: Commercial & Retail developments.

(Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.)

Also read: Tata Power shares hit record high; overbought on charts; what’s next?

Also read: Hot stocks on December 6: Adani Power, Suzlon Energy, Tata Power, Balaji Amines and more