'Buy' Sobha Shares Maintains HDFC Securities On Multiple Positive Triggers — Check Target Price

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HDFC Securities Institutional Equities

Sobha Ltd. is expected to clock Rs 100 billion+ in sales for FY26 (+70% YoY), supported by:

1. a strong launch pipeline in high-growth markets (Bengaluru, NCR, and Pune) and

2. brand-led pricing power and strong execution. While near-term P&L margins may be impacted by CCM accounting, improved execution ramp-up, self-owned land share, and pricing strength should enable embedded profitability in FY26.

Sobha remains a top pick in the southern premium housing space, with strong recall, expanding geographic footprint, and improving financial metrics. This concentrated launch activity underpins the confidence in achieving H2 FY26 presales of approximately Rs 60 billion, firmly placing Sobha on track to meet its upgraded target of Rs 100+ billion in FY26 presales, representing ~70% YoY growth.

Sobha's Q2 FY26 results reflect a staggering 61.4% YoY growth, with the company having achieved sales of Rs 19.03 billion (ahead of our est of Rs 16.5 billion, -8.5% QoQ, ex of Banerghatta project launch owing to RERA approval not coming on time).

Bengaluru has contributed Rs 13,264 million (69.7% of overall sales), followed by NCR market, which decisively proves that demand is robust for the right type of product.

The company’s ability to command an annual percentage rate of Rs 13,648/sft, significantly above the broader market averages we cited, demonstrates its pricing power and insulation from the peak price concerns for the generic market.

The strong sustenance momentum and price-adjusted payment plans mentioned previously have effectively aided sales velocity.

Consequently, while the broader Bengaluru market may see a slowdown in investor-driven projects, Sobha is well-positioned to continue its growth trajectory, leveraging its brand equity to dominate the premium, end-user segment. Sobha seems to be on track with Rs 100 billion+ new launches in H2 FY26, setting the stage for FY26 presales to cross Rs 100 billion.

Valuation comfort, strong free-cahs-flow generation, and likely robust growth are key near-term triggers for further rerating. Given the robust launch pipeline, strong balance sheet, and stable cash flows, we maintain Buy with a target price of Rs 2,459/share.

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