Signature Global sees Q2 sales slowdown, yet Nuvama says 'Buy'; here's why

The analysts believe that SGIL remains on track to achieve a net-cash status by FY27E, backed by improving collections, prudent capital deployment, and a focus on the mid-income housing segment

Analysts at Nuvama Institutional Equities remain upbeat on real estate player Signature Global and have retained a ‘Buy’ rating on the scrip, citing that the company is poised to achieve a net-cash status by FY27E.

 

The analysts, however, have trimmed the target price on Signature Global shares to ₹1,410 from ₹1,456 per share on a rollover to Q2FY28E.  Amidst this, the company’s shares were trading with marginal gains of 0.08 per cent at ₹1,039.80 per share on the NSE.  Parvez Qazi and Vasudev Ganatra, analysts at Nuvama, believe that SGIL remains on track to achieve a net-cash status by FY27E, backed by improving collections, prudent capital deployment, and a focus on the mid-income housing segment. However, concerns around a likely moderation in housing demand and pricing momentum in the Gurugram market have led to a more tempered outlook. The Gurugram market, they said, is likely to see a moderation in housing demand as well as price growth going ahead.

 

 

"However, we are enthused by SGIL’s focus on the mid-income segment. Retain ‘BUY’ with a revised target price of ₹1,410 (earlier ₹1,456) on a rollover to Q2FY28E," the analysts wrote in a research note.  CATCH STOCK MARKET LIVE UPDATES TODAY

Pre-sales decline Y-o-Y, guidance maintained

In Q2FY26, SGIL reported pre-sales of ₹2,010 crore, down 28 per cent year-on-year (Y-o-Y) and 24 per cent sequentially. The company sold 1.3 million square feet (msf) of space during the quarter — a 44 per cent Y-o-Y decline — across 573 units, which is 46 per cent lower Y-o-Y.

 

The decline comes off a high base, with the previous quarter benefiting from the launch of the ‘CloverdaleSPR’ project in Sector 71, Gurugram (1.8 msf).

 

For H1FY26, total pre-sales stood at ₹4,650 crore, down 21 per cent Y-o-Y. Despite the slowdown, SGIL, the brokerage said, has retained its full-year pre-sales guidance of ₹12,500 crore (₹125 billion), implying it needs to deliver a sharp 79 per cent Y-o-Y growth in H2FY26 to meet the target.

Average ticket size rises, price realisation improves

A higher contribution from Gurugram helped improve the average ticket size, which rose 33 per cent Y-o-Y and 3 per cent Q-o-Q to ₹3.51 crore in Q2FY26. Average price realisation stood at ₹15,000 per sq. ft., up 28 per cent Y-o-Y, though down 8 per cent sequentially.

 

"SGIL continues to focus on ensuring its offerings remain affordable for end-users despite rising price points," said the analysts.

Collections steady, debt inching up

The brokerage further highlighted that collections during the quarter remained largely stable at ₹940 crore, up 2 per cent Y-o-Y and 1 per cent Q-o-Q. Net debt increased by ₹80 crore sequentially to ₹970 crore at the end of Q2FY26. The rise was attributed to continued business development activity.

 

The company acquired 33.5 acres of land during the quarter — including 31 acres in Sohna — with a total development potential of 1.76 msf.

Mid-income focus, net cash by FY27E

According to the analysts, the company has maintained its FY26E guidance in both pre-sales and collections. Its net debt-to-operating surplus ratio stood at 0.54x at the end of FY25.

 

"Given SGIL’s robust sales trajectory, we believe it shall have to step up land capex. Nevertheless, a rising collections trajectory and improving profitability imply that free cash flow (FCF) shall continue to rise. We reckon SGIL is poised to achieve a net-cash status by FY27E," the analysts added.