He has reduced the stake in the company but not exited it completely. While he did not give any reason why he pared his stake, I suspect that the price movement was not as per his expectations and he might have found investment opportunities elsewhere. The rationale behind why he invested in Sunteck initially is available in a YT video.
Notes from Mohnish Pabrai’s Video – Great Businesses vs. Great Investments
Yes, Rinkesh. That’s correct. He now owns only 2.2% of the company, a significant reduction from the initial 9.9% investment. I’ve watched the investment video you mentioned, and I was interested in understanding what prompted the shift in his Sunteck thesis if he mentioned it anywhere. He has also significantly reduced his investment in Rain, so perhaps it’s related to market trends rather than specific stocks.
Pabrai is exiting India completely as per recent news report
Mr Pabrai is going all in on Turkey where he finds the entire market in deep value territory. In fact if anything, his selling is reliving the overhang. CLSA bought most of what he sold. The public shareholding has not increased materially.
Company has missed its pre-sales target of Rs.2000 crores for the year 2023-24. Also, collections have fallen marginally during the year from Rs.1250 crores to Rs.1236 crores.
From: India Ratings Upgrades Sunteck Realty to ‘IND AA’/Stable
Expected pre-sales growth: 18%-20% in FY24 and FY25.
Collections to be lower at 60%-65% of pre-sales over FY24-FY26 as large portion of the sales have been achieved in initial stage projects
Expected to launch a commercial project of around 1 million square feet in the ODC cluster, which expects to generate rental income of INR2.0 billion-2.5 billion.
The ready-to-move unsold inventory at end-9MFY24 is worth more than INR16.0 billion.
Asset-light JDA approach
Total free cash flow (accounting for any capex/ JDA, but excluding interest) of around INR2.1 billion over FY25-FY27.
Sunteck Q4 and fy 24 result highlights
Sunteck Q4 concall highlights
Pre sales of 1915crs in FY24 a growth of 20%.
Long term credit rating upgraded to AA.
Company is now net debt free.
Expect a pre sales growth of 30-35% in FY25.
Sunteck has an inventory of around 8 months in projects under construction.
Launch pipeline:
Q2 - new phase of Mira Road and Naigaon
Q3 - 5th Avenue ODC
Q4 - Napean Sea Road
Value of inventory to be launched will be 4000 - 5000cr.
Revenue recognition to be higher than FY24 as 4th Avenue, Max World and sales from BKC will be recognized. Margins should also be better.
Value of ready to move in finished inventory is 1500 - 1600cr.
Looking for new business development in Luxury segment.
Sunteck has leased two commercial properties in BKC for rent of 70cr annually for a period of 29 years.
Looking to add new commercial property in ODC. Will use cash flow of business to create rental assets.
Disclosure: Invested
