50% return in 2025? MOFSL bets big of this multibagger real estate stock; here's why
MOFSL said strong pre-sales growth will drive a rapid scale-up in operations across key parameters such as cash flows, revenue, and profitability, enhancing confidence in the company's execution capabilities and future growth potential.
- Jan 2, 2025,
- Updated Jan 2, 2025 8:22 AM IST
Multibagger stock: SignatureGlobal India Ltd shares, which are up 252 per cent over the 2023 IPO price of Rs 385, could deliver nearly 50 per cent return in 2025, said MOFSL. With its strong presence in strategic locations in Gurugram, SignatureGlobal India is on track to capitalise on the ongoing demand, guided by a strong project pipeline of 24.3 million square feet (msf), the domestic brokerage said while suggesting a target price of Rs 2,000 on the stock. MOFSL said SignatureGlobal India has focused on the underserved segment of affordable and mid-income housing in Gurugram through the state government’s policy since commencing operations in 2014.
Its quick turnaround strategy -- acquisition to launch, led to a rapid scale-up, MOFSL said adding that the company has sold over 32,000 units or 25 msf in the past decade and posted a pre-sales CAGR of 63 per cent over FY21-24.
"The company posted a CAGR of 13 per cent in volumes, reflecting a substantial improvement in average realisation, guided by its shift toward premium offerings. Now, with a focus on premium offerings and a strong pipeline, the company’s pre-sales are expected to clock a 35 per cent CAGR in value terms," MOFSL said.
MOFSL said strong pre-sales growth will drive a rapid scale-up in operations across key parameters such as cash flows, revenue, and profitability, enhancing confidence in the company's execution capabilities and future growth potential.
"Based on the NPV method, we value SignatureGlobal India's existing project pipeline of 30msf (includes recent launch) at Rs 15,000 crore. Thus, the current valuation implies 34 per cent of the going concern premium for the company, indicating that a significant portion of the future growth potential is yet to be accounted for," it said.
MOFSL values the stock at Rs 2,000, indicating a 50 per cent upside potential.
The brokerage said SignatureGlobal India's margin expansion is not visible due to strong launches. It noted that embedded operating margins for SignatureGlobal India's projects are upwards of 35 per cent, while reported margins are far lower.
"The lower operating margins are attributed to higher indirect costs currently charged to the P&L for projects with lower realisations, which are in the revenue recognition phase. However, reported Ebitda margins are expected to show visible expansion from FY26 and steadily move toward embedded margins in the near future," MOFSL said.
It sees margin for FY26 and FY27 at 20 per cent and 25 per cent, respectively, as higher realisation projects come up for recognition. Additionally, with the current visibility, all projects are expected to be launched by FY27, resulting in lower indirect cost recognition thereafter. As a result, a convergence of reported and embedded margins is expected beyond that.
Multibagger stock: SignatureGlobal India Ltd shares, which are up 252 per cent over the 2023 IPO price of Rs 385, could deliver nearly 50 per cent return in 2025, said MOFSL. With its strong presence in strategic locations in Gurugram, SignatureGlobal India is on track to capitalise on the ongoing demand, guided by a strong project pipeline of 24.3 million square feet (msf), the domestic brokerage said while suggesting a target price of Rs 2,000 on the stock. MOFSL said SignatureGlobal India has focused on the underserved segment of affordable and mid-income housing in Gurugram through the state government’s policy since commencing operations in 2014.
Its quick turnaround strategy -- acquisition to launch, led to a rapid scale-up, MOFSL said adding that the company has sold over 32,000 units or 25 msf in the past decade and posted a pre-sales CAGR of 63 per cent over FY21-24.
"The company posted a CAGR of 13 per cent in volumes, reflecting a substantial improvement in average realisation, guided by its shift toward premium offerings. Now, with a focus on premium offerings and a strong pipeline, the company’s pre-sales are expected to clock a 35 per cent CAGR in value terms," MOFSL said.
MOFSL said strong pre-sales growth will drive a rapid scale-up in operations across key parameters such as cash flows, revenue, and profitability, enhancing confidence in the company's execution capabilities and future growth potential.
"Based on the NPV method, we value SignatureGlobal India's existing project pipeline of 30msf (includes recent launch) at Rs 15,000 crore. Thus, the current valuation implies 34 per cent of the going concern premium for the company, indicating that a significant portion of the future growth potential is yet to be accounted for," it said.
MOFSL values the stock at Rs 2,000, indicating a 50 per cent upside potential.
The brokerage said SignatureGlobal India's margin expansion is not visible due to strong launches. It noted that embedded operating margins for SignatureGlobal India's projects are upwards of 35 per cent, while reported margins are far lower.
"The lower operating margins are attributed to higher indirect costs currently charged to the P&L for projects with lower realisations, which are in the revenue recognition phase. However, reported Ebitda margins are expected to show visible expansion from FY26 and steadily move toward embedded margins in the near future," MOFSL said.
It sees margin for FY26 and FY27 at 20 per cent and 25 per cent, respectively, as higher realisation projects come up for recognition. Additionally, with the current visibility, all projects are expected to be launched by FY27, resulting in lower indirect cost recognition thereafter. As a result, a convergence of reported and embedded margins is expected beyond that.