How Signature Global shift towards premium homes is boosting its fortunes

Started in 2014, as an affordable housing developer Signature Global earned a name for itself in the Delhi-NCR market. But the once leading player in the affordable housing market, has shifted its focus on the premium category. 

After testing the waters with a project off the Dwarka Expressway, with units priced at ₹1 crore (₹7,000 for a square foot), the company is now gearing up to try its luck in the premium housing space. In Sector 37D, Gurgaon, the developer has launched its first premium high-rise project, with apartments at ₹2.5-3 crore or ₹13,000 a sqft. “There are some 1,000 units, and we have received nearly 5,400 applications,” Pradeep Aggarwal, Founder-Chairman of Signature Global (India) tells Business Today.

The project has fetched sales of ₹3,600 crore, which, together with its April-December sales number of ₹3,124 crore, has boosted its FY2024 sales number to close to ₹8,000 crore. (Signature Global had reported sales of ₹3,431 crore in FY2023.) Moving towards pricier units has also helped the realtor improve realisation per square foot from less than ₹4,000 in FY2021 to ₹11,762 at the end of FY2024.

Signature Global that used to get over 90% if its sales from affordable housing projects during its early days, is now getting only a third (33%) from the segment. However, of the projects on the drawing board, only 1% are in the affordable segment, while premium projects will be in double digits.

While the company has been in red for the past few years, ICICI Securities reckons Signature Global will turn profitable at the net level in FY2024, with a net profit of over ₹100 crore, which will go up to over ₹1,350 crore by FY2026. Net revenue will grow to over ₹6,900 crore from ₹1,586 crore in FY2023, given its lean banking business model that ensures rapid conversion from acquisition to delivery.

Adhidev Chattopadhyay, Vice-President- Equity Research, ICICI Securities, says, “Signature delivered 43% sales booking CAGR over FY21-23, largely through affordable/mid-income housing projects.”

With affordable projects turning financially unviable, Aggarwal may have moved towards mid-income and premium homes, but his affinity towards the segment is not over. If the government tweaks the norms and/or offers cheaper land, he is still ready to get back in the business. For now, the focus is on establishing Signature Global in the premium space. Gearing up to the plan, the company is preparing to launch premium projects worth Rs 12,000 crore in Sector 71 and Sohna (priced over Rs 2.5 crore a unit) and in Sector 37D and 84 (priced over Rs 1 crore) within FY25.