Sunteck Realty rating: India Ratings revises Sunteck Realty’s outlook to positive; affirms ‘IND AA-’ rating
The outlook revision reflects the rating agency’s expectation of an improvement in the business profile of Sunteck Realty due to acceleration in the already consolidating residential real estate market, with the pandemic-related disruptions having constrained demand for and supply from unorganized property developers.
The likely improvement in Sunteck Realty business profile is also supported by its resilient operating performance despite the pandemic, its upcoming projects, and price point diversity with new project launches, its prudent financial policies, with strong credit metrics, and adequate cash flow visibility, India Ratings said.
It expects grade I players, including Sunteck Realty, to continue winning market share in the real estate market. The market share of grade I players rose to 17% of the total floor space sold in December quarter in Sunteck Realty’s local market from 6.8% in 2018. Ind-Ra expects this phenomenon to continue as grade II players have been finding it difficult to access financing, and also, buyers have become increasingly wary of the former’s ability to deliver projects on time.
In the nine months ending December, Sunteck’s pre-sales rose by 6.5% on-year to Rs 650 crore led by the new launch at Avenue 4-Tower II, Oshiwara District Center (ODC), Ram Mandir in December 2020. Collections from already sold projects also moved higher during this period, the ratings agency noted.
The other projects supporting the sales improvement were Signia High at Borivali, Sunteck Avenue I and II at ODC. For the year 2020-21, the company expects pre-sales to remain above Rs 900 crore.
India Ratings has cited Sunteck’s resilient performance despite pandemic-led disruptions, prudent financial policies, strong credit metrics, price-point diversity, locational advantage, low execution risk for ongoing projects, asset-light model, cash flow visibility in residential projects over near-to-medium term and forthcoming commercial projects among key factors for affirming the rating.
