Sunteck's zero-debt model rides well in realty mkt

Kamal Khetan prefers to keep a “very cautious” approach while doing his business. “We have not done any wrong acquisitions when markets were overheated between 2006-09. We bought land when prices bottomed out,’’ says the 42-year-old managing director of Sunteck Realty, a Mumbai-based property developer.

Khetan’s words should be understood in the backdrop of how real estate developers recklessly bought land during the property boom to create valuations and piled up huge amounts of debt on their books.

Sunteck has acquired nearly a dozen land parcels since 2009, either alone or with its joint venture partner, the Ajay Piramal group. Investors seem to have rewarded Khetan’s caution and planning. Sunteck’s stock has gained 18 per cent since the beginning of the year, thereby becoming the third best performer in the realty pack and beating biggies such as DLF, Unitech, HDIL, Indiabulls Real Estate and others.

Khetan says around 80 per cent of Sunteck’s 28 projects (32 million sq ft) are in the suburbs of Mumbai. “All our projects are in marquee locations, where demand is high and will grow exponentially. These projects command 20 to 30 per cent premium to others,’’ says Khetan.

Analysts say Sunteck’s projects in Bandra Kurla Complex have paid. “We are not leveraged. Even if the market collapses, we can deliver on time,’’ says Khetan. Sunteck’s average land cost is less than the price of transferable development rights at Rs2,500 a sq ft.

Besides, Sunteck follows the completion method, where sales are recorded in the books of the company after a building is completed and sold. “So, we need not manipulate the balance sheet if the market crashes,’’ he says.