Trading At a target price of Rs 2,000 per share, Motilal Oswal Financial Services Ltd (MOFSL) has commenced coverage on real estate developer Signature Global with a ‘buy’ rating. All the information you require concerning the development is provided here.
MOFSL Initiates Coverage on Gurugram Real Estate
As of right now, Motilal Oswal Financial Services Ltd (MOFSL) has a target price of Rs 2,000 and a ‘buy’ rating for Gurugram-based real estate developer Signature Global (SIGNATURE). The target price set by the firm suggests a 37.7% increase over Monday’s closing price.
Important details regarding this development are as follows:
momentum prior to sales
The real estate developer is anticipated by Motilal Oswal Financial Services to maintain its growing momentum and generate a CAGR of 35 percent annually cent in pre-sales for the period of FY24–27E, to17,800 crore rupees.
Signature Global recorded a 42% CAGR in pre-sales from FY21 to FY23 thanks to its standardized offers and fast turnaround strategy. The brokerage claims that the company’s ability to quickly adjust to shifting consumer preferences has also allowed it to enter the premium category.
The stock increased by as high as Rs 60.1, or 4.1%, to Rs 1,512.7 per share on the BSE on Tuesday.
Margin superior to competitors, MOFSL Initiates Coverage on Gurugram Real Estate
According to the brokerage, Signature Global management’s rigorous land purchase strategy has allowed it to retain margins of over 35 percent, which is better than the company’s peers, while also reducing costs.
exposure to key areas
The brokerage has brought attention to the real estate developer’s pay attention to the thriving real estate industry in Gurugram. According to the brokerage, the management has had its sights set on the rapidly expanding Haryana markets of Gurugram and Sohna from the beginning.
According to MOFSL analysts’ study report, “In CY23, Gurugram’s residential demand surpassed its CY09 highs and reported absorption of over 21,000 units.”
Having launched its “first premium project in 4QFY24, which was sold out within 48 hours with 5.4x subscription”, the business is turning its attention to the premium segment and has a robust project pipeline.
robust cash flows
According to MOFSL, SIGNATURE produced operating cash flow (OCF) of Rs 900 crore in FY24.
Signature Global projects a cash flow of Rs 2,200 crore for the current fiscal year, of which Rs 1,500 crore will be allocated to land acquisition and the remaining amount to debt reduction.
Assessment
In comparison to its peers, MOFSL believes that Signature Global shares are more attractively priced.
According to MOFSL, Signature Global shares are trading at a five-times EV-to-EBITDA multiple at the present market price compared to pre-sales expectations for FY26.
The brokerage stated in its analysis that “comparable peers are trading above 8–10x EV/EBITDA, further confirming the discounted valuation.”
a solid history
Since starting operations in 2014, SIGNATURE has demonstrated a strong track record of execution. Through state government policy, SIGNATURE has concentrated on the underserved segment of low and mid-income homes in Gurugram. According to the brokerage, the company’s development through government initiatives has improved its cost economics and exposed it to a larger consumer base.
In just ten years of operation, as of March 2024, the company has supplied 6 million square feet and plans to supply 16 million by FY26; some of its competitors took longer to attain this magnitude, it stated.
Principal hazards
According to the brokerage, there are three primary hazards listed:
heightened focus in Gurugram
Declining Demand
What is the work that Signature Global does?
Since starting up in 2014, the business has grown to become one of the largest developers of real estate in the Delhi-NCR area. Using the housing policies of the state government, it started out in the affordable and low-to-mid-income housing market.
Account opning link:
- Groww Account- https://app.groww.in/v3cO/kyrp1zph
- Kotak neo Account https://kotaksecurities.ref-r.com/c/i/32531/109103906
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