Target: ₹1,436
CMP: ₹1,083.35
Signature Global (SGIL) is currently in a strong position with a significant increase in pre-sales momentum (TTM bookings up approximately 7.6 times from FY21 to 9M-FY25), a notable presence in the supply-constrained Gurugram market (unsold inventory of only about 10 months), and a capital-efficient business model (with one of the lowest capital employed per unit of pre-sales).
Thanks to judicious land acquisition, SGIL’s land cost is only 10-15% of the pre-sales value. This has resulted in healthy cash operating margins at around 35%, with the potential to reach 40%.
As of end-Q3FY25, SGIL’s net debt to TTM operating surplus ratio was about 0.5 times. With bookings expected to exceed ₹10,000 crore in FY25, the company may need to increase its land capex to replenish its land bank. However, increasing collections and improving profitability indicate that free cash flow will continue to rise.
Due to the current real estate upswing and SGIL’s successful shift to the premium housing segment, it is expected to achieve a pre-sales CAGR of 21% from FY25 to FY27E. The potential entry into Noida/Delhi could trigger a re-rating. We recommend initiating a ‘Buy’ rating with a target price of ₹1,436 (at a 20% premium to NAV).
A key risk is a slowdown in the Gurugram market.
