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Buy This Top Real Estate Stock, Shares Can Gain 34% Feels Sharekhan
Broking firm Sharekhan believes that the stock of Macrotech Developers can gain significantly from the current levels. The brokerage when doing its report had predicted a 28% higher price, when the stock was at Rs 1065. It has since fallen another 6%, implying an upside potential of 34%.
Management guidance
According to Sharekhan, the management retained pre-sales guidance of Rs 11,500 crores for FY2023, a growth of 25% y-o-y. "Net Debt target of Rs. 7000 crore by March 2023 (earlier Rs. 6000 crore). It has exceeded the new project addition target of Rs. 15000 crore with Rs. 17800 crore project additions done till 9MFY2023. It estimates average price growth of 5-6% for FY2023 (5% pricing growth during 9MFY2023). It saw 10,000 families visits at sites during December, which was the second highest for any month. It retained 20% pre-sales CAGR growth with 20% RoE target over the medium term, " Sharekhan's report has noted.
Sales guidance likely to be exceeded feels Sharekhan
Macrotech is likely to exceed its pre-sales guidance for FY2023 while already surpassing new project addition targets. "However, it has lagged in meeting OCF and net debt targets for FY2023 as net collections are yet to catch up with strong pre-sale booking while there has been an increase in construction spends. It continues to have a strong launch pipeline for the balance fiscal. Its innovative interest subvention schemes for two years without affecting operational performance is expected to provide cushion in a hardening interest rates scenario over the next two years," Sharekhan has said.
34% upside on the stock possible
According to Sharekhan, Macrotech's leadership position in the Mumbai Metropolitan Region (MMR) and an eye on newer geographies such as Pune and Bengaluru are expected to sustain pre-sales growth. "The company's balance sheet is expected to improve further, led by strong cashflow generation expected from residential projects. Hence, we retain our positive view of the stock and expect a potential upside of 28%," the brokerage has said.
As indicated earlier at the time of the report, Sharekhan took Rs 1065 as the prevailing stock price, which is Rs 1005 now, thus 6% lower. This means the upside potential moves higher to 34%.
Disclaimer
The stock is picked from the brokerage report of Sharekhan. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.
About the author
Sunil Fernandes has an experience of 28-years, which includes stock (equity) research and business reporting. Sunil has worked with frontline news papers like Hindustan Times, Deccan Herald & Gulf Times covering business and finance. He has also worked with equity research firms as well investment magazines like Dalal Street Investment Journal. He is presently the Managing Editor of Goodreturns.in.
