Signature Global share price more than triples investor wealth in 8 months; Kotak upgrades the stock to add from sell
Signature Global share price tripled investors' wealth in 8 months, surging 229 per cent since its debut. Kotak upgraded the stock to an 'add' from a 'sell' with a fair value of ₹1,375 on strong FY24 results.
Signature Global share price has seen a stupendous rally during the last few months. Since its debut on Indian bourses on September 27 last year, Signature Global share price has surged as much as 229 per cent until the May 17 close, against its issue price of ₹385 per share.
Thus, Signature Global share price has more than tripled investors' wealth in about eight months.
Despite such strong gains, brokerage firm Kotak Institutional Equities remains positive about the stock. Kotak upgraded the stock following the company's strong FY24 results.
The brokerage firm has upgraded the stock to an 'add' from a 'sell' and raised its fair value to ₹1,375 from ₹1,175 earlier, citing the company delivered exceptional operational performance in FY24.
On May 15, the company reported its consolidated net profit of ₹412.54 million for Q4FY24 against a profit of ₹76.47 million in the same quarter, marking a year-on-year (YoY) jump of nearly 440 per cent.
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Kotak pointed out that Signature Global reported its best-ever quarterly pre-sales of ₹41.4 billion, up 240 per cent YoY and 228 per cent QoQ for Q4FY24. This boosted the FY24 pre-sales to ₹72.7 billion, up 112 per cent YoY, meaningfully ahead of the company’s initial guidance of ₹45 billion.
Kotak observed that the company's net debt increased 37 per cent QoQ on expected lines to ₹11.6 billion. Signature reported weak Q4FY24 revenue of ₹6.9 billion, down 1 per cent YoY but up 146 per cent QoQ, with EBITDA of ₹201 million and a margin of 3 per cent. Adjusted for interest cost, EBITDA margin stood at 12.7 per cent.
Kotak pointed out that the company's management has given stronger guidance for FY25 of ₹100 billion (up 37 per cent YoY) of pre-sales with an embedded EBITDA margin of 35 per cent, aided by launches of ₹160 bn (up 280 per cent YoY) and collections of ₹60 billion (up 90 per cent YoY).
"We highlight that at pre-sales of ₹100 bn and embedded margins of 35 per cent, Signature is attractively valued at nearly five times EV/EBITDA; accordingly, we upgraded the stock to an 'add' from a 'sell' with a revised fair value of ₹1,375 from ₹1,175 earlier even as we remain watchful of the recognised margin trajectory for Signature Global. The revision in fair value is due to incremental projects (from new business development) and an aggressive sales velocity leading to healthier asset turnover," said Kotak.
Signature Global share price rose 2.5 per cent in morning trade on BSE on Friday, May 17. Around 11:10 am, the stock traded 1.96 per cent higher at ₹1,289.65 apiece on BSE. Equity benchmark Sensex was 0.28 per cent up at 73,871 at that time.
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