Add Sobha, target price Rs 964: HDFC Securities

HDFC Securities has add call on Sobha with a target price of Rs 964. The current market price of Sobha Ltd. is Rs 813.35. Time period given by analyst is one year when Sobha Ltd. price can reach defined target.

Sobha Ltd., incorporated in the year 1995, is a Mid Cap company (having a market cap of Rs 7756.02 Crore) operating in Real Estate sector.

Sobha Ltd. key Products/Revenue Segments include Property Development, Income From Construction Work, Income From Glazing, Income From Interiors, Income From Financial Services, Concrete Blocks, Land Development Rights, Rental Income, Scrap for the year ending 31-Mar-2021.


Financials
For the quarter ended 31-12-2021, the company reported a Consolidated Total Income of Rs 697.50 Crore, down -16.20 % from last quarter Total Income of Rs 832.30 Crore and up .17 % from last year same quarter Total Income of Rs 696.30 Crore. Company reported net profit after tax of Rs 32.70 Crore in latest quarter.

Investment Rationale
Sobha (SDL) reported strong quarterly presales of 1.3msf (+17%/-2% YoY/QoQ), valued at INR 10.5bn. INR 10bn in quarterly sales seems to be the its new normal. Bengaluru saw a significant rebound from the previous quarter, accounting for 73% of total presales volume (vs 59% in the previous quarter). The residential launch pipeline stands at 13.4msf, with 62% of launches planned for the Bengaluru market. SDL has taken price hikes of 2- 3% in a few of its projects to offset rising input costs. The average price realisation has increased 4% QoQ to 7,920psf. SDL achieved the highest-ever cash inflow of INR 10.6bn (+22%/+16% YoY/QoQ) on the back of the highest- ever residential cash collection of INR 8.4bn.

Promoter/FII Holdings
Promoters held 51.99 per cent stake in the company as of 31-Dec-2021, while FIIs owned 18.06 per cent, DIIs 12.65 per cent.