In This Article:
Sunteck Realty Limited (NSE:SUNTECK), a ₹48.3b small-cap, operates in the real estate industry which is the most prevalent industry globally, and has continued to play a crucial role in the portfolios of investors. Real estate analysts are forecasting for the entire industry, a positive double-digit growth of 15% in the upcoming year , and a strong near-term growth of 12% over the next couple of years. However, this rate came in below the growth rate of the Indian stock market as a whole. Below, I will examine the sector growth prospects, as well as evaluate whether Sunteck Realty is lagging or leading in the industry.
View our latest analysis for Sunteck Realty
What’s the catalyst for Sunteck Realty’s sector growth?
As yields for high quality real estate investments came under pressure, investors have swung towards more niche buildings such as student housing and data storage facilities. Over the past year, the industry saw negative growth of -9.3%, underperforming the Indian market growth of 22%. Sunteck Realty leads the pack with its impressive earnings growth of 38% over the past year. However, analysts are expecting its future earnings growth to be more in-line with the industry average, hovering at 14% over the next couple of years.
Is Sunteck Realty and the sector relatively cheap?
The real estate industry is trading at a PE ratio of 17.42x, in-line with the Indian stock market PE of 17.01x. This means the industry, on average, is fairly valued compared to the wider market – minimal expected gains and losses from mispricing here. However, the industry returned a lower 3.7% compared to the market’s 9.3%, potentially indicative of past headwinds. On the stock-level, Sunteck Realty is trading at a PE ratio of 17.87x, which is relatively in-line with the average real estate stock. In terms of returns, Sunteck Realty generated 9.5% in the past year, which is 5.8% over the real estate sector.
Next Steps:
If Sunteck Realty has been on your watchlist for a while, now may not be the best time to enter into the stock. The company is a real estate industry laggard in terms of its future growth outlook, and is trading relatively in-line with its peers. If growth and mispricing are important aspects for your investment thesis, there may be better investments in the real estate sector. However, before you make a decision on the stock, I suggest you look at Sunteck Realty’s fundamentals in order to build a holistic investment thesis.
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Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
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Historical Track Record: What has SUNTECK’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
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Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Sunteck Realty? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.