Checking the stock of Sunteck Realty: With a 75% increase from its 52-week low, is it time to buy?

 Checking the stock of Sunteck Realty: With a 75% increase from its 52-week low, is it time to buy?

Due to robust demand and positive second-quarter business reports from corporations, real estate equities have seen substantial increases so far this year. This month, the index reached a new high. The index has increased by more over 40% so far this year, whereas the benchmark Nifty has only increased by 8.5 percent. Sunteck Realty, like the majority of real estate equities, has reached new highs this month.

On October 16, the stock reached its 52-week high of $485.95. It has already increased 75% from its 52-week low of $271.25, set on June 23, 2023, to its current trading price of $474.50.

The stock has increased by almost 43% so far this year, posting gains in six of the first ten months. Following a 25% increase in September, it has so far gained 5% in October. The most significant increases were in July (up 29%) and declines in February (18%).

However, during the last 12 months, it has done worse than its benchmark. The stock has increased by almost 24 percent over the last year, while the Nifty Realty index has increased by over 42 percent.

Earnings For the three months ending June 30, 2023, Sunteck Realty recorded a combined net loss of 6.73 crore rupees. In the meanwhile, its combined total revenue dropped significantly, dropping from 148.71 crore in Q1 FY23 to 88.41 crore in Q1 FY24.

Pre-sales increased by 16 percent year-over-year (YoY) to 387 crore during the quarter, according to the business, while collections were steady at 288 crore. Its EBITDA margin was 43% for its core profits before interest, taxes, depreciation, and amortization.

Net debt for the firm was 264 crore, with a net debt-to-equity ratio of 0.09 times.

Sales

As demand momentum persisted in the Mumbai Metropolitan Region (MMR) market, Sunteck Realty said that its pre-sales increased 17.2 percent YoY to about 395 crore in the third quarter. Meanwhile, pre-sales for the first half of FY24 increased by 16.7% YoY to 782 crore.

However, revenue for the quarter was 210 crore, a decrease of 35% YoY and 26% QoQ. The H1FY24 period saw a 19 percent YoY decline in revenue of 500 crore.

In the meantime, the company and the IFC (International Finance Corporation) agreed to establish a joint platform with a combined investment of up to 750 crore for the construction of four to six green housing projects in the Mumbai Metropolitan Region (MMR) that will include the development of close to 12,000 high-quality housing units.

Fundamental View Nuvama: The firm has a 'buy' call on the company and boosted its target price to $578, representing a potential gain of 22%.

"With the housing cycle turning, consistent project portfolio growth (25.5msf addition post-covid), and inventory release in ongoing projects, we anticipate a stronger sales trajectory for SRL. Investor attention has switched away from project additions and toward launches for SRL. The TP is amended to 578 from 438 after taking into account the impending launches in Kalyan and Nepean Sea Road, according to Nuvama.

"Consolidation brought on by RERA is revealing development potential for organized players like SRL. We like SRL's broad market coverage and competent execution. Housing demand is on the rise again (see Real Estate - Leadership matters), SRL is focused on cash flows, and it has low gearing, so these factors should all work in its favor. Investor attention on SRL has switched towards launches from new project additions since home sales are doing well across the board for listed developers, it added.

Jefferies: The firm upped its target price for Sunteck Realty from 415 to 555 and maintained a "buy" call on the stock. The revised aim predicts an increase of 17%.

The brokerage is optimistic about the company's chances for greater governance and development. In a note, Jefferies said that Sunteck Realty's partnership with IFC, a World Bank member, to develop a platform for low and middle-income housing is encouraging since 75% of the portfolio is targeted at this market. The government's well-liked "Housing for All" (urban) program will be revived with greater speed thanks to the expansion. According to the brokerage, it seems that the government will shortly approve the reintroduction.

The major trend for Sunteck Realty is still favorable on a weekly basis. The stock exhibits a number of bullish patterns on a daily basis, such as a double bottom formation and the conversion of a previous resistance level into a support level, suggesting a promising prognosis for ongoing price growth. Notably, the stock is strong since it is trading above important moving averages, such as the 20 and 50 day moving averages.

Sunteck has produced an outstanding 9.93 percent return over the last month, compared to a 1.58 percent decline for the BSE 500. The RSI's current value of 68 indicates a bullish bias.

Existing investors could maintain their holdings, thereby avoiding slight corrections. Around the 450 zone, new investors can find a good entry opportunity.

Additionally, the outperformance of the real estate market may act as a catalyst, accelerating the trajectory of the stock higher. Investors should keep a watch on this industry since it might support the stock's increase even further.

Swastika Investmart's Pravesh Gour, Senior Technical Analyst

The counter just broke out of a flag formation and is now in a strong uptrend. It formed a solid foundation around its breakout level of 420; nevertheless, 500 is an immediate resistance where it may halt, but beyond this, it is probably going to go towards 550 levels.

On the downside, 420 represents significant support throughout any drop, and 400 represents the next important demand level. Given that it is trading above all of its significant moving averages, the counter's structure seems to be sound. Notably, the relative strength index (RSI) momentum indicator is in a strong position, and the moving average convergence divergence (MACD) confirms the market's strength at the time.

Axis Securities' Rajesh Palviya, SVP of Technical & Derivatives Research

The stock is producing a string of higher tops and bottoms, showing a bullish bias, and is going upward on the daily and weekly timeframes. A bullish trend is additionally reinforced by the stock's strong placement above its 20, 50, 100, and 200-day SMAs. Any significant monthly closure above these levels may spark an uptrend since the stock is forming a "inverse head & Shoulder formation" on the monthly chart with a neckline value of 550. Increased involvement is shown by the growing volumes over the last four months. Overall mood is still optimistic, therefore any short-term dip towards levels between 440 and 420 represents a chance for accumulation. The stock may grow upwards to levels between 550 and 650. In bullish territory, the weekly, monthly, and quarterly strength indicators suggest increasing strength.

VP of InCred Equities Gaurav Bissa

The Nifty Realty index and Sunteck Realty have moved in lockstep. Since 2017, the stock has traded in a wide range, with strong resistances at 540 levels and supports around 250 levels. On the monthly charts, RSI and MACD have created a double bottom, and MACD has seen a bullish crossover, indicating that the trend is anticipated to continue. Holding the stock for an increase to 540 levels is suggested for investors. A monthly closing over 540 might propel the stock to levels between 700 and 800. Due to the stock's consolidation, new purchases are not encouraged.

Director of Progressive Shares Aditya Gaggar

Sunteck Realty Ltd. has provided a breakthrough from the Falling Channel (Lower Top Lower Bottom) pattern on the monthly chart with a sizable volume. The leading oscillator RSI's breakthrough of a 5-year-old trendline further supports the trend shift. MACD and other trend-following indicators have shown a positive crossing, while ADX is pointing to the start of a trend. According to the pattern and all of the indicators above, the objective is 630 and the present uptrend is expected to continue.