Sunteck Realty expects its pre-sales to grow three-fold to Rs 5,000 crore by FY28 | CPT PPP Coverage

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City-based real estate player Sunteck Realty expects its pre-sales to grow over three times to Rs 5,000 crore by FY28 as it launches three large luxury projects and completes the ongoing ones.

The luxury projects-focused realtor would close FY23 with around Rs 1,700 crore in pre-sales/bookings and a Rs 513 crore revenue on the balance sheet.

For the first nine months of FY23, its net income stood at Rs 29 crore, up from Rs 25 crore a year ago, on a revenue of Rs 314 crore.

Accounting norms (IFRS) allow a developer to book revenue only from completed projects and not from pre-sales.

Established in 2007, Sunteck delivered over 40 million sq ft across 30 projects under five brands — Signature, Signia, Sunteck City, Sunteck World and commercial & retail under Sunteck labels. All of its projects are in the Mumbai metropolitan region (MMR).

Signature, the first uber-luxe apartment tower in the tony BKC business district, is home to some of the biggest names in India Inc, such as Gautam Adani and Uday Kotak, apart from a few film stars.

“We’ve set a pre-sales target of at least 20 per cent annual growth on average and 30 per cent in the best-case scenario for the next four fiscals.

“We are likely to close FY23 with Rs 1,600-1,700 crore in pre-sales (up from Rs 1,066 crore in FY22), and at 20-30 per cent sales target, we should easily be crossing Rs 5,000 crore by FY28,” its chairman and managing director Kamal Khetan told PTI.

Khetan said that after more than a decade of depressed prices, the industry is in a sweet spot now and even at the elevated interest rate, there is no impact on consumer sentiment so far, pointing to the way their Mira Road project was 75 per cent sold out in just about 15 days of the launch in March.

Hopefully, this should continue for the long term, Khetan said.

On why he limits himself to the MMR, Khetan said, “Why should he enter a new market when he has the best opportunities right in this city itself? In fact, there is no realty market like Mumbai, and that’s why, every other builder is looking to enter the city”.

Sunteck has been growing its projects across the MMR at a fast pace, and since the pandemic, it has snapped up 125 acres/five plots across the western and eastern suburbs, which has a development potential of over 25 million sq ft of saleable area. The just-launched Mira Road project is one of them.

Following joint development projects, Sunteck pays 25-30 per cent of the pre-sales revenue to the landlords and has already spent around Rs 200 crore on these plots in Vasai, Vasind, Borivali, Kalyan (Shahad) and Mira Road.

Khetan said these projects have a total gross development value of close to Rs 20,000 crore over the next six-seven years, with the residential segment contributing 80-85 per cent and the rest coming from the commercial and retail segments.

On the financials, Khetan said they normally don’t borrow (barring short-term working capital) to build a new project but instead meet the expenses from pre-sales revenue. The company has one of the lowest leverage ratios at 0.14x and a cash balance of around Rs 830 crore now.

In this current fiscal, he said the company will be launching at least three new projects on the five plots they acquired during the pandemic, and this should lead us to the pre-sales target of Rs 5,000 crore.