Sunteck Realty: Building a solid foundation

A recent Morgan Stanley note on Mumbai realtors to its clients shows that Sunteck Realty is the cheapest stock amongst its peers. The company's stock is available at a 60 per cent discount to its gross March 2015 NAV compared to 18-47 per cent discount in other companies.

The net asset value is the discounted value of the cash flows from the future projects at a certain rate (14-15 per cent usually). The report looked at developers with strong balance sheets and high cash-flow visibility and does not include players such as DB realty and HDIL. It said Sunteck's stock is the cheapest, while shares of Godrej Properties and Oberoi Realty are the most expensive in the March 2014 quarter.

"We follow project completion method of accounting and, hence, we did not report any profit from our ongoing projects earlier," said Kamal Khaitan, chairman of Sunteck to ET. "But from this year onwards, we will have at least 3-4 projects completing every year which will ensure 25-30 per cent growth in our earnings over the next few years."