Buy Sobha, target price Rs 574: Edelweiss

Edelweiss has buy call on Sobha with a target price of Rs 574. The current market price of Sobha is Rs 522.05. Time period given by analyst is one year when price can reach defined target.

Sobha Ltd., incorporated in the year 1995, is a Mid Cap company (having a market cap of Rs 4655.98 Crore) operating in Real Estate sector.

Financials
For the quarter ended 31-03-2021, the company reported a Consolidated Total Income of Rs 588.90 Crore, down -15.42 % from last quarter Total Income of Rs 696.30 Crore and down -36.51 % from last year same quarter Total Income of Rs 927.60 Crore. Company reported net profit after tax of Rs 17.90 Crore in latest quarter.

Investment Rationale
Revival in housing demand, Sobha’s focus on cash flows and geographical expansion should hold it in good stead. Cash flow improvement is a key stock catalyst. The brokerage maintains ‘BUY/SN’ with SOTP-based target price of INR574/share. It derives the TP by applying 10% discount to its NAV of INR589/share for the residential business plus value of the contractual business.

Promoter/FII Holdings
Promoters held 52 per cent stake in the company as of March 31, 2021, while FIIs held 18.1 per cent, DIIs 12.4 per cent and public and others 17.5 per cent.