Sobha’s Stock Gains On Record Sales Volume In Q4

Shares of Sobha Ltd. posted their biggest single-day gain in three months after the real estate developer reported best-ever sales volume in the quarter ended March.

The Bengaluru-based company reported total sales volume of 13.37 lakh square feet of super built-up area worth Rs 1,072 crore in the January-March period, according to its quarterly business updates released on the bourses. Sales volumes achieved in Bengaluru, Gurugram, Pune and Kochi were the highest ever.

Sobha also claimed its fourth-quarter performance on all operational parameters to be the best-ever in its history.

“The real estate sector revival looks to be a long-term structural story though some headwinds remain,” the company said in the exchange filing. “However, uncertainties of the second Covid wave and its impact is yet to be assessed.”

The real estate firm also saw price realisations of Rs 8,014 per square feet, the highest in eight quarters. “This reflects the efforts made by the company in having launches at the right place, digital market, optimum utilisation of in-house capabilities and operational efficiency,” it said.

Other highlights from the business update:

• Sales volume, total sales value and total price realisations were up 48%, 54% and 5%, respectively, from Q4FY20; and 18%, 21% and 2%, respectively from Q3FY21.
• Launched new residential projects of 2.77 million square feet of super built-up area and 0.27 million square feet in commercial space.
• Other regions, especially Gurugram, Kochi, Thrissur and Pune, have seen significant traction in demand sentiments.
• Cash flows remained healthy resulting in a substantial reduction in net debt.
• Price realisations are up 10% compared to second half of FY20.
• For FY21, sales in value terms were up 9% year-on-year and price realisations were up 10%.
• Contribution of other regions to overall sales volume and value in FY21 is the highest ever in the company’s history.
• The company also said increase in input costs will have to be monitored.

ICICI Securities has maintained its FY22 and FY23 sales volume estimates for Sobha at 4.7 and 5 million square feet. A slowdown in residential demand and a rise in the company’s debt, however, are risks to its ‘buy’ rating.

According to Jefferies, Sobha is a preferred pick among broader market peers within the property space for its housing market leverage.

Shares of Sobha gained as much as 8.7% in early trade on Tuesday to Rs 468.95 apiece. All the 17 analysts tracking the company recommend either ‘buy’ or ‘accumulate’, according to Bloomberg data. The average of the 12-month consensus price target implies an upside of 8.4%.