Brokerage firm ICICI Securities has initiated coverage on SignatureGlobal India with a ‘Buy’ rating and a target price of ₹1,705, which implies an increase of 20% from Monday’s closing price. It values the company at 9x FY24-26E average embedded EBITDA on sales reserves.
“Our multiple of 9x is at a 40% discount to DLF, its closest peer – given that Signature would need to reinvest internal accruals to replenish land banks while DLF has the luxury of historic low-cost land in Gurugram,” ICICI Securities said in a report.
Residential real estate developer, SignatureGlobal India has a lean banking business model that boasts of quick conversion from acquisition to delivery, enabling it to channel internal accruals for future growth, it added.
Read also: Delhivery shares: Kotak Equities upgrades stock to ‘Buy’, raises target price; sees more than 24% up
Signature delivered 43% sales booking CAGR during FY21-23, mainly through affordable/middle income housing projects. The company has now ventured into high quality group housing projects in prime areas of Gurugram
As of December 2023, SignatureGlobal has a strong portfolio of 45.3 million square feet (msf) of salable area across ongoing and upcoming projects. All its upcoming projects, with an estimated cumulative gross development value (GDV) of over ₹40,000 crore, is expected to be launched between FY24 and FY26.
“Given its strong launch pipeline of projects with a cumulative GDV of over ₹40,000 crore over FY24-26E, we estimate that Signature can clock 38% sales booking CAGR over FY23E-27E with sales order ranging between ₹10,000 – 12,000 crore annually over FY25E-27E at average realizations of over ₹13,000 per sq ft,” ICICI Securities said.
The brokerage firm expects the share of middle-income housing projects to oscillate between 65-70% during this period at realizations of more than. ₹10,000 per square foot.
Read also: SpiceJet’s share price jumps 4% after this statement before Delhi High Court
“In early March 2024, Signature announced that it was over ₹3,600 crore sales orders from the successful launch of its first premium residential project in Gurugram with an average ticket size of ₹35 million per unit at an average realization of over ₹13,000 per sq ft, which is a testament to the company’s brand strength and ability to monetize premium group housing projects,” the brokerage firm said.
SignatureGlobal made a strong stock market debut in September 2023 when the shares were listed at ₹445.00 apiece on the BSE, a premium of 15.58% to the issue price of ₹385 per share.
SignatureGlobal shares have given multibagger returns since its listing. The stock is up more than 220% from its list price. In the last three months, SignatureGlobal shares have gained more than 73% and more than 58% in 2024 so far.
At 2:00 pm, SignatureGlobal shares were trading 2.91% lower at ₹1,382.70 apiece on the BSE.
Catch Stock Live Updates here
Disclaimer: The opinions and recommendations made above are those of individual analysts or trading companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
Unlock a world of Perks! From insightful newsletters to real-time stock tracking, breaking news and a personalized news feed – it’s all here, just a click away! Login Now!
Catch all Business News, Market News, News Events and Latest News Updates on Live Mint. Check out all the latest action on Budget 2024 here. Download The Mint News App to get Daily Market Updates.
More or less
Published: 05 Mar 2024, 14:02 IST