Realty in focus: Sunteck posts strong operational update, JP Morgan bullish on Indian real estate

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JP Morgan believes that the India residential cycle is turning up with buyer sentiment turning positive on the back of all-time-low mortgage rates and the impact of COVID-19, which seems to be forcing households to look at financial safety and better home quality. As per them, Q3 presales have likely been strong across space. They expect 2H21 sales to compensate for losses in the first five months and expect stronger growth in FY22.

They add within the sector, consolidation towards listed developers is likely to continue given better balance sheets and execution. As per JPM, with markets are now looking at growth and balance sheets across the sector largely cleaned up, they believe that the key stock driver has shifted to sales booking growth from net debt/cash generation.

As long as companies report positive sales growth, they believe stocks will continue to do well. This has been seen in the case of Godrej Properties and DLF, where stock prices over the past two years have moved in tandem with the direction of presales.

Key points from the JP Morgan note:

Like DLF / Prestige Estates. Godrej Properties

Residential cycle turn in the offing

Residential sales are likely to be positive for developers

Sales prints in Q3 likely higher across developers

Expect presales print to be key stock driver over net debt

Balance sheet quality of listed developers likely to be main consolidation driver

In a real estate development, Sunteck Realty Limited, a Mumbai based real estate developer, announced its Q3 FY20-21 operational updates. The growth in pre-sales for Q3 FY21 was at Rs 349 crore. It was up by 75% QoQ and by 7% YoY as well. Collections also grew at 79% QoQ to Rs 252 crore for Q3 FY21 and by 52% YoY. As per the company, A combination of favourable factors such as the reduced stamp duty and low-interest rates is expediting the home-purchase decision.

Commenting on the Q3 FY21 performance, Mr Kamal Khetan, Chairman and Managing Director, Sunteck Realty Ltd. said: “Our customer-first approach has underpinned our continued strong performance. Our superior product offering coupled with strong customer service throughout the life-cycle of our patrons has won us the brand loyalty we command in the market today. A combination of favourable factors such as the reduced stamp duty and low-interest rates is expediting the home-purchase decision. We are observing a trend of increased demand and renewed buyer interest for high-quality products, especially those with a strong balance sheet and high brand recall. With project execution ramping up, the collections across our projects have been sequentially growing and we remain confident to maintain this strong trend.”


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