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Motilal Oswal Report
We initiate coverage on SignatureGlobal India Ltd. with a Buy rating and a DCF-based target price of Rs 2,000, implying 38% upside potential.
SignatureGlobal began its operations in 2014 and in just a decade, it has become one of the leading real estate developers in the Delhi NCR market. The company commenced its journey in the affordable and low/mid-income housing segment by leveraging the state government’s housing policies.
Through its standardized offerings and quick turnaround strategy, SignatureGlobal has scaled up rapidly and delivered a 42% CAGR in pre-sales over FY21-23. Its agility in adapting to changing market preferences has enabled the company to foray into the premium segment, which doubled its pre-sales to Rs 73 billion in FY24.
Its strong execution capabilities have enabled it to churn the capital and gear up with a strong ~30 million square feet project pipeline to be launched over the next two years. We, thus, expect the growth momentum to remain intact and expect SignatureGlobal to deliver 35% CAGR in pre-sales over FY24-27E to Rs 178 billion.
The management’s disciplined land acquisition strategy has enabled it to curtail costs and report margins of over 35% (better than peers).
Key risks:
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High concentration in Gurugram,
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inability to replenish its project pipeline, and
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slowdown in demand.
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