Axis Sec reaffirms 'Buy' as Signature Global expands into commercial realty

Brokerage firm Axis Securities has reiterated its ‘Buy’ rating on Signature Global (India) after the developer announced a 50:50 joint venture with RMZ Group to develop a large mixed-use commercial project in Sector 71, Gurugram, along the Southern Peripheral Road (SPR).

 

Under the agreement, RMZ will invest ₹1,283 crore for a 50 per cent stake in a special purpose vehicle (SPV), marking Signature Global’s entry into institutional-grade commercial real estate.

 

“Strategically, this marks SGIL’s entry into institutional-grade commercial real estate while continuing to focus on its core residential business. It expects lower leverage servicing with sustained cash generation. Management reiterated confidence that the JV will showcase cross synergies between the two companies and complement the company’s growth strategy,” Axis Securities said in its report.

 

 

The brokerage views the development as a strategic diversification into annuity-generating assets, while retaining focus on the residential segment. It expects the JV to lower leverage, strengthen cash flows, and create long-term value through rental income and asset appreciation.

 

At the current market price of ₹1,075 per share, Axis Securities’ research analyst Eesha Shah sees a potential upside of 22 per cent and has set a target price of ₹1,315. The brokerage values the company at 5.5x FY28E pre-sales/Ebitda and has discounted rental income at an 8 per cent capitalisation rate.  CHECK Stock Market LIVE Updates

Meanwhile, here are the key takeaways highlighted by Axis Securities in its report:

Project details and potential: According to Axis Securities, the SPV will be cash- and debt-free and will have development rights of around 18.5 million square feet. Of this, about 5.5 million square feet will be developed primarily as Grade A office space (3.5–4.0 million square feet), along with premium retail and one or two hotels. Post-development capital values are estimated at ₹26,000–30,000 per square foot. Office rentals are expected at ₹125–130 per square foot per month, while retail rentals are projected to exceed ₹250 per square foot per month over time.

 

The project, to be developed largely in a single phase, has a five-year timeline, with construction expected to commence within six to nine months. Designed as a long-term yield platform, returns are expected to be driven by rentals and asset appreciation. 

 

Land value unlocking: Axis Securities said the estimated historical cost of the land was around ₹500 crore, including acquisition and approval-related payments. RMZ’s ₹1,283 crore investment for a 50 per cent stake in the SPV implies a significantly higher valuation compared to the historical cost.

 

“This suggests meaningful value unlocking on land appreciation,” the brokerage noted.

 

Impact on balance sheet: According to Axis Securities, the transaction is balance sheet-positive for Signature Global. Of the ₹1,283 crore investment, over ₹1,000 crore will be infused into the SPV to clear liabilities, with the remainder coming as secondary stake sale proceeds to SGIL. Further, the management indicated that consolidated net debt of around ₹1,000 crore could reduce to near zero or potentially move to a net cash position after closure.

 

“Overall, this improves SGIL’s financial strength, lowers leverage risk, enhances return ratios over time, and gives the company more flexibility to pursue new land acquisitions and growth opportunities in both residential and commercial segments. This also gives SGIL the opportunity to explore further annuity opportunities over other land parcels,” the brokerage said.

 

Market opportunity: India’s office market exceeds 800 million square feet, with annual leasing of 50–60 million square feet. Gurugram remains a key NCR hub with around 100 million square feet of stock, supported by strong occupancies and rental growth.

  According to the brokerage, Sector 71 along the Southern Peripheral Road is emerging as a major commercial corridor due to connectivity to the Dwarka Expressway, Golf Course Extension Road and proximity to Delhi Airport. Demand from IT/ITES, BFSI and multinational corporations underpins a favourable long-term leasing and investment outlook, Axis Securities added.

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