The developer, with net debt-to-equity ratio of 0.13x, would fund the buyouts from its own cash flows
As Real Estate (Regulation and Development) Act pushes the sector into consolidation, Sunteck Realty has earmarked Rs 2,500 crore to lap up projects across affordable, mid-range and luxury segments.
The developer, which had earlier announced Rs 1,000 crore for acquisitions in affordable housing, will also be targeting projects in middle and luxury segments, with a corpus of Rs 1,000 crore and Rs 500 crore, respectively.
All the projects will be within the Mumbai Metropolitan Region.
"These investments would be from our own cash flows and there will not be any need to raise funds. We have a strong balance-sheet and almost negligible debt," Kamal Khetan, chairman and managing director of Sunteck Realty, told DNA Money.
The company had a debt of around Rs 329 crore at the end of the third quarter of last fiscal, with a net debt-to-equity ratio of 0.13x.
The Mumbai-based realtor, which has three verticals catering to various residential segments, will come out with a fourth vertical for affordable housing in the next couple of months, which Khetan terms as 'aspirational homes' as he does not want to dilute the existing brands.
At present, the company has Signature for uber-luxury homes, Signia for super-premium and Sunteck City for large formats in mid-segment, mixed-use developments. It also has Sunteck commercial developments for office spaces.
Of the initial Rs 1,000 crore that Sunteck had earmarked for acquisitions, it has utilised Rs 60 crore in tying up with a local builder in Naigaon on the outskirts of Mumbai for joint development of 100 acre under the yet-to-be-unveiled brand.
Recently, the company had acquired Orbit Corporation's ultra-luxury project at the upscale Napean Sea Road for Rs 34.20 crore.
The shares of Sunteck, which is a part of S&P BSE 500 firms, closed at 431.10 on Tuesday, a gain of 87.31% since the new real estate law came into force on May 1 last year, making it one of the best-performing realty stocks, which has delivered better returns than most of its peers. In the same period, S&P BSE Realty index has surged 16.18%, 30-share Sensex 18.79% and S&P BSE 500 by 14.91%.
The company is not the only player eyeing buyouts as Rera has triggered consolidation in the industry as smaller builders face heat under the new regulations.
Big realtors and listed companies are looking to take over lucrative stressed projects of the smaller firms that are unable to meet the project execution deadlines. Similarly, local developers who are fearing customer-oriented Rera regulations, too, are approaching the bigger players for either joint ventures or joint development projects.
BRICK BY BRICK
- Sunteck has set aside Rs 1,000 crore for affordable housing, Rs 1,000 crore for mid-range projects and Rs 500 crore for the luxury segment
- It will also come out with a fourth vertical - aspirational homes for affordable housing - in the next couple of months
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The company had a debt of around Rs 329 crore at the end of the third quarter of last fiscal, with a net debt-to-equity ratio of 0.13x.
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