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Target: ₹777
CMP: ₹640.8
Sobha management released an operational update recently. The following are the key takeaways:
Sobha has achieved the highest-ever quarterly sales volume of about 1.4mn sq ft, up 1 per cent QoQ & 51.7 per cent YoY, given steady sales velocity across projects. Total sales value was ₹1,145 crore, with growth of 67.7 per cent y-o-y and 3 per cent q-o-q.
The company’s share of sales value also was the highest-ever since inception at ₹951.7 crore. Average price realisation has improved 11 per cent y-o-y to ₹8,431 per sq ft, as a result of calibrated price increases in all projects & cities to offset inflationary forces.
Despite the price increase, higher homes loan rates, demand for Sobha homes continues to be strong across segments, particularly at Bengaluru and Gurugram.
Sobha was further able to reduce net debt as a result of healthy cashflow, In line with the last quarter.
According to management, construction cost remains elevated but is showing signs of stability; however, it expects inflation to rise further, which, in turn, will result in interest rate hikes.
The current unsold inventory, pipeline launches and landbank show good operational visibility in the near to medium term. We retain our revenue and EBITDA estimates during FY23-24. We reiterate our Buy rating with a TP of ₹777 based on1.0x one-year forward NAV.
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