Axis Securities has recommended a BUY rating for Signature Global (India) Ltd., with a target price of Rs 1,645 per share, suggesting a potential 29 per cent upside from its current market price. Signature Global, a prominent real estate developer in the Delhi/NCR region, is renowned for its focus on affordable and mid-segment housing.
Over the years, Signature Global has shifted its focus from affordable to mid-income and now premium homes, where demand surged. Recognising changing trends, Signature Global shifted its focus to homes priced between Rs 2 crore and Rs 6 crore. With only a few prominent brands in this segment, the company has successfully established itself as a leader over the past decade, showing its ability to dominate this market.
The company plans to target Gurugram's urban growth by tapping emerging micro-markets, including Sector 71, Sector 37D, and the Sohna/Manesar Corridor. These areas have benefits like connectivity and higher property values in the coming years. Signature Global's strategy to invest in these growing areas positions it well to tap into the increasing demand for mid and premium housing in North India's thriving trade and IT hubs.
Signature Global's financial growth is forecasted to surge from Rs 1,241 crore in FY24 to Rs 7,197 crore by FY27, showing an impressive CAGR of 80 per cent. Presales are forecasted to grow significantly, with bookings expected to reach Rs 18,129 crore between FY25 and FY27, driven by the upcoming launch of approximately 25 million sq. ft. The company's EBITDA margin is anticipated to improve significantly, from -2.1 per cent in FY24 to 27 per cent in FY27. Net profit is projected to increase substantially, from Rs 16 crore in FY24 to Rs 1,654 crore in FY27. Operating cash flow is expected to rise from Rs 621 crore in FY25 to Rs 2,708 crore in FY27. By FY27E, the company is expected to report negative net debt, signalling strong financial health.
The company boasts a quick turnaround time, with land-to-launch taking just 18 months, faster than the industry standard. It holds a 27 per cent market share in Gurugram's micro-markets, reinforcing its market leadership. Additionally, its strategic land acquisition focuses on locations with high infrastructure growth and connectivity.
With its strong sales momentum, strategic expansion into high-growth areas, and impressive financial projections, Signature Global is well-positioned to meet the growing demand for mid and premium housing in Gurugram. With a solid financial outlook and strategic expansion plans, the company offers a compelling investment opportunity with a potential upside of 29 per cent.
