Sunteck Realty stock may give good returns in one year

2020 was a rollercoaster period for India’s property market, wherein demand collapsed due to the pandemic destroying housing demand across the board. Like the stock market which swung wildly in 2020, the housing sector also witnessed both famine and feast. The unreal year of Covid-19 led to demand and supply crashing but eventually ended the year on a bright note. The housing sector recovered smartly and ended 2020 on a high note with a sharp 72% quarter on quarter recovery in housing sales and 52% quarter on quarter improvement in office leasing. The revival has been on the back off rising affordability due to low interest rates, cut in stamp duty and price rationalisation by developers. Analysts were surprised by the pace of this recovery as research reports indicate that all major cities witnessed significant improvement in housing sales. Actually there was a substantial change in customer behaviour as sitting at home for months and working from home led many people to look at their housing needs in a totally new way. With the sector languishing for many years, most of the property developers and brokers are quite bullish on the housing sector and believe that 2021 will be a year of growth. The housing segment is expected to clock good volumes both in the commercial and retail segment and reach normalcy levels by the end of the year. Analysts also foresee consolidation in the reality space in favour of organised developers with strong balance sheet and established brands. Sunteck Realty Ltd is a Mumbai-based real estate development company catering to the premium and ultra luxury residential segment. The company has a blue chip portfolio of 27 projects spread across 36 million square feet in Mumbai .The company’s flagship projects are located in the Bandra Kurla Complex area in the name of Signature Island, Signia Isles and Signia Pearl. The company reported a robust consolidated total income of Rs.208.66 crores and a profit after tax of Rs 21 crore for the quarter ended December 31, 2020. The company has a healthy leverage and a asset light strategy which bodes well for it in the future. The company is also in the phase of launching new projects in Vasai, Vasind, and Naigaon areas in Mumbai which is expected to boost sales during the next two years and significantly increase the profitability of Sunteck. As of December 30, 22 2020 the promoters of Suntec hold 67% stake in the company, while FIIs hold 23%, DIIs 3.6% while the public hold the balance 5.6% stock. Investors looking at real estate companies can accumulate Sunteck Realty stock at the current market price of Rs 348 for a price appreciation target of Rs.510 in the next one year time frame.
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.