Sunteck Realty stock check: Up 75% from 52-week low, should you invest in the stock now?

Sunteck Realty has risen over 43 percent this year, giving positive returns in 6 of the 10 months so far. LiveMint collated views of brokerage firms and technical analysts to understand whether the stock is a ‘buy’ at this juncture or not.

Pranati Deva
First Published19 Oct 2023, 12:37 PM IST
Sunteck Realty has risen over 43 percent this year.
Sunteck Realty has risen over 43 percent this year.

Realty stocks have been witnessing healthy gains this year so far thanks to strong demand and encouraging second-quarter business updates from companies. The index hit its new peak earlier this month. The index has surged over 40 percent this year so far as against an 8.5 percent rise in benchmark Nifty. Most realty stocks have also hit new highs this month, including Sunteck Realty.

The stock hit its 52-week high of 485.95 earlier this week on October 16. Currently trading at 474.50, it has already advanced 75 percent from its 52-week low of 271.25, hit on June 23, 2023.

The stock has risen over 43 percent this year, giving positive returns in 6 of the 10 months so far. It has added 5 percent in October so far, following a 25 percent jump in September. It has surged the most in July, up 29 percent and shed the most in February, down 18 percent.

However, it has underperformed its benchmark in the last 1 year. The stock has gained around 24 percent in the last one year versus an almost 42 percent rally in the Nifty Realty index.

Earnings

Sunteck Realty reported a consolidated net loss of 6.73 crore during the quarter ended June 30, 2023. Meanwhile, its consolidated total income fell over 40 percent to 88.41 crore in Q1FY24 from 148.71 crore last year.

The company said that during the quarter, pre-sales grew by 16 percent year-on-year (YoY) to 387 crore, while collections remained strong at 288 crore. Its core earnings before interest, taxes, depreciation, and amortisation (EBITDA) margin stood at 43 percent.

The company's net debt reached 264 crore, while the net debt-equity ratio stood at 0.09 times.

Sales

In the September quarter, Sunteck Realty announced that its pre-sales grew 17.2 percent YoY to around 395 crore as demand momentum continued in the Mumbai Metropolitan Region (MMR) market. Meanwhile, for the first half of FY24, pre-sales witnessed a 16.7 percent YoY growth to 782 crore.

However, collections during the quarter were down 35 percent YoY and 26 percent QoQ to 210 crore. H1FY24 collections also dipped 19 percent YoY 500 crore.

Meanwhile, the company also signed a pact with IFC (International Finance Corporation) to create a joint platform with a total investment of up to 750 crore for the development of close to 12,000 high-quality housing units across four to six green housing projects within the Mumbai Metropolitan Region (MMR).

LiveMint collated views of brokerage firms and technical analysts to understand whether the stock is a ‘buy’ at this juncture or not. Let's take a look:

Fundamental View

Nuvama: The brokerage has a ‘buy’ call on the stock and raised its target price to 578, indicating an upside of 22 percent.

“We expect a higher sales trajectory for SRL with the housing cycle turning, sustained expansion of project portfolio (25.5msf addition post-covid), and release of inventory in existing projects. For SRL, investor focus has shifted towards launches from project additions. We factor in the upcoming launches in Kalyan and Nepean Sea Road, resulting in a revised TP of 578 ( 438 earlier),” said Nuvama.

"RERA-driven consolidation is uncovering growth opportunities for organised players such as SRL. We like SRL’s diversified presence in the MMR and robust execution capability. Revival in housing demand (refer to Real Estate – Leadership matters), SRL’s focus on cash flows and a low gearing should hold it in good stead. With housing sales going strong across the board for listed developers, investor focus regarding SRL has shifted towards launches from new project additions," it said.

Jefferies: The brokerage maintained a 'buy' call on Sunteck Realty and raised its target price to 555 apiece from 415 apiece. The new target indicates an upside of 17 percent.

The brokerage is bullish on the company's improved growth and governance prospects. In its note, Jefferies said that Sunteck Realty's tie up with IFC, a member of the World Bank, to create an affordable and mid-income housing platform is a booster as 75 percent of the portfolio is geared to the affordable and mid-income housing segment. The growth will accelerate a reintroduction of the interest subsidy component of the popular 'Housing for All' (urban) scheme of the government. It seems that the government is likely to give green signal to the reintroduction very soon, the brokerage added.

Technical View

Om Mehra, Technical Analyst, SAMCO Securities

Source: SAMCO

In the weekly time frame, the primary trend remains bullish for Sunteck Realty. On a daily scale, the stock displays several bullish patterns, including a double bottom formation and the transformation of prior resistance into a support level, implying a favorable outlook for continued price appreciation. Notably, the stock stands above key moving averages, including the 20 and 50-day DMA, indicating its strength.

Over the past month, Sunteck has yielded an impressive 9.93 percent return, while the BSE 500 has experienced a 1.58 percent drawdown. The RSI currently stands at 68, reflecting a positive bias.

Existing investors could hold their positions, potentially sidestepping minor corrections. Fresh investors might find an opportune entry point around the 450 zone.

Moreover, the outperformance of the realty sector can serve as a catalyst, potentially propelling the stock's upward trajectory. Investors should keep an eye on this sector, as it could further bolster the stock's rally.

Pravesh Gour, Senior Technical Analyst, Swastika Investmart

The counter is in a strong uptrend where it was broken out of a flag formation. It created a strong base around its breakout level at 420; however, 500 is an immediate resistance where it may see some pause, but above this, it is likely to head towards 550 levels.

On the downside, 420 is major support at any correction, while 400 is the next critical demand level. The structure of the counter looks good as it is trading above all its important moving averages. Notably, the RSI (relative strength index) momentum indicator is favorably positioned, while the MACD (moving average convergence divergence) reinforces the current market strength.

Rajesh Palviya, SVP - Technical & Derivatives Research, Axis Securities

The stock is trending higher on the daily and weekly timeframe, forming a series of higher tops and bottoms, indicating positive bias. In addition, the stock is also well placed above its 20, 50, 100 and 200-day SMA, which reconfirms a bullish trend. On the monthly chart, the stock is making an "inverse head & Shoulder formation" with a neckline value of 550; hence, any decisive monthly close above these levels may trigger upside momentum. The past four months' rising volumes signify increased participation. The overall sentiment remains bullish; hence, any short-term decline towards 440-420 levels remains an accumulation opportunity. On the upside, the stock may scale towards 550-650 levels. The weekly, monthly and quarterly strength indicator in bullish terrain signals rising strength.

Gaurav Bissa, VP, InCred Equities

Sunteck Realty has moved in line with the Nifty Realty index. The stock has been trading a large range since 2017 with supports placed at 250 and major resistances seen at 540 levels. RSI and MACD have formed a double bottom on the monthly charts with MACD witnessing a bullish crossover, implying the trend is expected to remain strong. Investors are advised to hold the stock for an upside to 540 levels. A monthly close above 540 can catapult the stock towards 700-800 levels. Fresh buying is not advised due to the stock being in a consolidation.

Aditya Gaggar, Director of Progressive Shares

In the monthly chart, Sunteck Realty Ltd has given a breakout from the Falling Channel (Lower Top Lower Bottom) formation with a considerable volume. A 5-year-old trendline breakout in the leading oscillator RSI also confirms the change in the trend. Trend-following indicators such as MACD have given a positive crossover while ADX is pointing toward the beginning of a trend. All the above readings indicate a continuation of the current uptrend and as per the pattern, the target is 630.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie. We advise investors to check with certified experts before taking any investment decisions.

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1.4%

₹773 Cr

₹2,705 Cr

₹1 Cr

₹14,370 Cr

₹5.74 T

First Published:19 Oct 2023, 12:37 PM IST
HomeMarketsStock MarketsSunteck Realty stock check: Up 75% from 52-week low, should you invest in the stock now?

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