Signature Global Share Price Target at Rs 1,315: Axis Securities
Axis Securities has reiterated its BUY recommendation on Signature Global (India) Ltd., setting a revised target price of Rs 1,315, implying a potential upside of approximately 22% from the current market price of Rs 1,075. The upgrade follows a transformative strategic development: Signature Global’s entry into institutional-grade commercial real estate through a 50:50 joint venture with RMZ Group. The transaction not only unlocks substantial land value but also positions the company for deleveraging, recurring rental income, and stronger return ratios. With improving margins, expanding pre-sales, and a strengthening balance sheet, the company is entering a structurally different growth phase.
Strategic Inflection: Entry into Institutional Commercial Real Estate
Signature Global has formalized a 50:50 joint venture with RMZ Group to develop a large-scale mixed-use commercial project in Sector 71, Gurugram. RMZ will invest Rs 1,283 Cr for a 50% stake in the special purpose vehicle (SPV).
The project will span approximately 5.5 million sq. ft., comprising primarily Grade A office space (3.5–4.0 million sq. ft.), premium retail, and hospitality assets. Capital values post-development are estimated at Rs 26,000–30,000 per sq. ft., with office rentals projected at Rs 125–130 per sq. ft. per month and retail rentals exceeding Rs 250 per sq. ft. per month over time.
Importantly, this is not a trading model. It is designed as a long-term yield platform, meaning rental income and capital appreciation will drive returns rather than outright asset sales.
Land Value Unlocking: A Re-rating Catalyst
The historical cost of the land parcel stood at approximately Rs 500 Cr. RMZ’s Rs 1,283 Cr investment for a 50% stake implies a significantly higher valuation versus acquisition cost.
This represents meaningful value unlocking and underscores the embedded optionality in Signature Global’s land bank. The transaction effectively re-prices the underlying asset base and enhances net worth visibility.
Balance Sheet Transformation: From Leverage to Liquidity
One of the most compelling aspects of this transaction is its impact on the balance sheet.
Management indicated that the consolidated net debt of around Rs 1,000 Cr could reduce to near zero — potentially shifting the company into a net cash position post-closing.
This deleveraging has multiple implications:
Lower finance costs
Stronger return ratios
Improved flexibility for land acquisition
Reduced leverage risk profile
With a healthier capital structure, Signature Global can now pursue annuity income streams alongside its core residential business.
Gurugram Commercial TAM: Structural Demand Tailwinds
India’s commercial office market has crossed 800 million sq. ft. of stock with annual leasing of 50–60 million sq. ft.
Gurugram alone accounts for approximately 100 million sq. ft. of existing office space, supported by strong occupancy and rental growth dynamics.
Sector 71 (Southern Peripheral Road) benefits from:
Connectivity to Dwarka Expressway
Proximity to Golf Course Extension Road
Access to Delhi Airport
Strong IT/ITES and BFSI tenant demand
The micro-market is emerging as a next-generation commercial corridor.
Operational Momentum: Pre-Sales and Collections
The company’s booking and collection trajectory reflects sustained residential demand.
| Metric (Rs Cr) | FY25 | FY26E |
|---|---|---|
| Bookings | 10,290 | 10,300 |
| Collections | 4,380 | — |
Management is guiding for approximately 15% growth in pre-sales.
With limited inventory in ongoing projects, timely launches remain critical to sustaining collection guidance.
Financial Trajectory: Margin Expansion and Earnings Growth
Axis Securities projects significant financial acceleration through FY28E.
| (Rs Cr) | FY26E | FY27E | FY28E |
|---|---|---|---|
| Net Sales | 2,998 | 4,197 | 5,330 |
| EBITDA | 628 | 858 | 1,075 |
| Net Profit | 511 | 731 | 723 |
| EPS (Rs) | 36 | 52 | 51 |
EBITDA margins are expected to stabilize around 20% over FY27E–FY28E.
Return ratios improve materially:
ROE: 36.36% in FY26E
ROE: 38.39% in FY27E
Such return metrics signal operating leverage and capital efficiency gains.
Valuation Framework and Target Price
Axis values the company at:
5.5x FY28E Pre-sales/EBITDA
Rentals discounted at an 8% cap rate
The resulting target price of Rs 1,315 implies a 22% upside from CMP.
Current valuation metrics remain reasonable relative to growth:
FY27E P/E: ~16x
FY28E EV/EBITDA: ~9x
Given the emerging annuity income model, the stock could potentially command a structural re-rating.
Risk Factors to Monitor
Despite the constructive outlook, investors should monitor:
Approval delays affecting new launches
Geographical concentration risk in Gurugram
Execution and construction delays
Pricing moderation impacting realizations
The residential inventory cycle remains launch-dependent.
Investment Conclusion
Signature Global is transitioning from a high-growth residential developer to a hybrid model with institutional-grade commercial exposure. The RMZ joint venture not only monetizes land value but fundamentally alters the company’s capital structure and earnings visibility.
With deleveraging underway, margins expanding, return ratios strengthening, and a credible commercial foray backed by a seasoned institutional partner, the stock presents a compelling medium-term opportunity.
Axis Securities maintains a BUY with a target price of Rs 1,315.
