Sobha share price rises 5% post Q4; here's what brokerages say

Share price of real estate firm Sobha rose 5 percent in early trade on June 30 a day after the company posted its fourth quarter numbers.

The company has reported a 5 percent decline in its consolidated net profit at Rs 281.5 crore for the last fiscal despite higher income and achieved strong sales bookings of Rs 2,881 crore. Its net profit stood at Rs 297.1 crore in the financial year 2018-19.

Total income, however, rose to Rs 3,825.7 crore in 2019-20 from Rs 3,515.6 crore in the preceding fiscal.

Net profit in the fourth quarter of FY20 fell to Rs 50.7 crore from Rs 113.3 crore in the year-ago period.

Total income for the March quarter dipped to Rs 927.6 crore from Rs 1,421.6 crore in the corresponding period of the previous year.

CLSA | Rating: Downgrade to outperform from buy | Target: Cut to Rs 252 from Rs 276

The potential cancellations have raised the concern over demand environment. However, management says that the enquiries are back to pre-COVID levels and sales may revive after site visits normalise.

CLSA has cut presales estimates 18%/6% for FY21/FY22 due to near-term demand concerns, reported CNBC-TV18.

Jefferies | Rating: Buy | Target: Rs 306

According to Jefferies, the residential business has picked up in June with inquiries at pre-COVID levels. The sales are expected to hit pre-COVID levels soon, while the construction activity is still only at 50% levels.

It has cancelled Rs 1,200 crore worth of past sales as collections were slow-moving. The managing of cashflows & executing well on sales will be important in FY21, reported CNBC-TV18.

Morgan Stanley | Rating: Overweight | Target: Rs 361

The company has shifted its focus on cash preservation and aim to reduce debt in FY21 & prefer to be defensive in the COVID-19 world. The target to match FY20 pre-sales, if June trends hold, reported CNBC-TV18.

At 09:23 hrs, Sobha was quoting at Rs 226.80, up Rs 9.30, or 4.28 percent on the BSE.