This Small Cap Stock Has Slumped 15% In 5 Days, But Analysts See Over 40% Upside

Shares of Sunteck Realty have gone down close to 15% in the past five sessions. However, analysts at Prabhudas Liladhar see the stock making a strong comeback as it noted that the company’s September quarter results were steady.

The Sunteck Realty Analyst: The Param Desai-led analyst team at Prabhudas Liladhar maintained the “buy” rating for the stock with a price target of ₹545. The target indicates an around 44% upside from the stock’s last closing price of ₹393.90.

The Sunteck Realty Thesis: The analysts noted that the real estate company reported robust pre-sales of ₹400 crore in the September quarter, marking a 17% increase year-on-year and a 2% growth quarter-on-quarter. As per the brokerage, these impressive numbers are primarily driven by high mid-income projects. However, the firm highlighted that collections saw a decline of 26% quarter-on-quarter due to a substantial portion of sales being executed toward the end of the quarter.

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However, the firm pointed out that not all was bright in the company’s recent results. Sunteck Realty has faced operational challenges, with a lack of significant project completions leading to an EBITDA loss, the brokerage firm remarked in its latest note.

Looking forward, the domestic brokerage expects the company’s pre-sales to double over the next three years, supported by ongoing projects and a robust pipeline of new launches. Moreover, with the anticipated strong cash flow generation estimated at Rs 800-1,000 crore over the period from FY23 to FY26, Sunteck Realty is likely to increase its portfolio with new project additions. The firm expects this to serve as a key catalyst for the company’s stock performance.

Price Action: Sunteck Realty’s share price was up 4.58% to trade at ₹411.95 on Friday afternoon.

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Posted In: Analyst ColorEquitiesPrice TargetReiterationMarketsAnalyst RatingsSunteck Realty