Signatureglobal the largest real estate development company in Delhi NCR in the affordable and lower mid segment housing in terms of units supplied (in below Rs 80 lakh price category) between 2020 and 2023, with a market share of 19%. They started operations in 2014 through their subsidiary, Signature Builders Private Limited, with the launch of Solera project on 6.13 acres of land in Gurugram, Haryana. They have grown our operations over the years and in less than a decade, have sold 27,965 residential and commercial units, all within the Delhi NCR region. We have strategically focused on the Affordable Housing (AH) segment (below Rs. 40 lakhs) and the Middle Income Housing (MH) segment (between Rs. 40 lakhs to Rs. 25 lakhs) through GoI and state government policies. Real estate sector is an important contributor to country’s economy, and plays a significant role in terms of growing market size and share in India’s GDP. Housing sector in India is by and large catered by private sector. Housing or residential asset class has witnessed several changes in the last four years. There are some structural changes such as implementation of Real Estate Regulator Act (RERA), implementation of GST for under construction housing, and effects owing to demonetization, the temporary liquidity crisis of 2018-19 (NBFCs related) and 2020 (Covid-19). Housing sales increased 48% YoY to Rs. 3.47 lakh crore in the past fiscal year due to larger volumes and better price realisation. Affordable housing today is an integral part of the national agenda with focus in the urban areas. There have been introduction and revision in policies and measures at both the national and state level, to encourage and regularize development in this sector.
Strengths And Risks
+ Largest in Affordable Segment: : THey are focussed on the affordable and lower mid segments in Delhi NCR which have significant demand. In the past 5 years, absorption has outnumbered supply in this category and inventory has been continuously declining, indicating sustainable demand.
+ Established Brand: : They have within a relatively short period of time developed a strong brand and customer goodwill based track record of delivering value homes. They have won various awards including Best Affordable / Budget Housing Developer of the Year at the 13th Annual Estate Awards 2021, Developer of the Year, Residential, at the 13th Realty+ Conclave and Excellence Awards (North), 2021 and Best LIG Housing Project for project Solera at the PMAY Empowering India 2019, presented by GoI
+ Fast Growth: : They have demonstrated ability to scale up rapidly by growing project portfolio from 9.06 million sq. feet of Saleable Area as on March 31, 2018, to 44.65 million sq feet of Saleable Area as on March 31, 2023.
+ Project Execution Expertise: : They have adopted an integrated real estate development model, with capabilities and resources to carry a project from conceptualization to completion. E.g. with centralised raw material procurement, they manage to offer competitive pricing.
+ Positive Operating Cash Flows & Low Debt: : They have been able to generate positive operating cash flows despite incurring significant business development expenses for growth and without significantly increasing leverage
- Single Location:: Their business is significantly dependent on the performance of the real estate market in the DelhiNCR region, and particularly in Gurugram and Sohna micro-markets in Haryana. Fluctuations in market conditions may affect business.
- Industry Risk: : Real estate business is highly prone to risk of unsold inventory, rise in land prices, raw material, labour costs, changes in regulation etc.
- Government Incentives: : The withdrawal of certain benefits under the Haryana Affordable Housing Policy, 2013 and the Deen Dayal Jan Awas Yojna, may adversely affect business and prospects.
- Losses: : Company has incurred net loss and negative Net Worth in the past. Their Subsidiaries have also incurred losses in the past, which can have adverse effect on reputation and business. Further, there are certain defaults/ delay in payment of statutory dues by Subsidiaries which may attract financial penalties.
- Litigations:: There are certain outstanding litigation proceedings involving Company, Subsidiaries, Directors, Promoters and Group Companies, which can impact reputation and business.
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