Sobha Jumps Most In Two Months On Record Sales

Shares of Sobha Ltd. rose nearly 11 percent, the most in over two months after the real estate developer clocked its best-ever yearly sales in value terms with growth across regions and product categories.

The Bengaluru-based firm registered new sales volume of 36.3 lakh square feet, total valued at Rs 2,861 crore at an average price realisation of close to Rs 7,892 per square feet at the close of financial year 2017-18, the filing said. The sales volume and values are up by 40 percent and 31 percent, respectively, on a year-on-year basis.

The fourth quarter new sales were little over 10 lakh square feet, where its share of sales stood at Rs 656 crore in value terms, translating into an average price realisation of Rs 6,457 per square feet, it said in an exchange filing yesterday.

Following the announcement, shares of the company today opened at Rs 535, then surged further to touch an early high of Rs 564, up 11 per cent over its previous closing price. The stock was trading 8.1 percent higher at Rs 550.30 on the NSE at 11.51 a.m.

The company plans to continue launching new projects in the current financial year, and aims to again clock double digit growth in terms of sales volume and value, JC Sharma, managing director, Sobha, told Blombergquint.

“We plan to launch new projects at all the locations where we are operating... With the new projects, and fading effects of RERA and GST, the growth momentum should continue,” he said, adding that there would be around eight to 10 new launches in this year.

He attributed the strong March quarter sales numbers to highest-ever sales performance in the Bangalore market both in volume and value terms for the financial year 2017-18.

Price Outlook

The company will not be reducing prices but also doesn't plan to increase costs due to the current market sentiment, Sharma said. “We will be cautious and ensure intact margin.”

Here's what brokerages had to say on Sobha:

CLSA

• Maintains ‘Buy' rating with target price of Rs 760, as market-share gains unfold for organised companies.
• Strong fourth quarter performance took FY18 pre-sales to all-time high.
• Awaiting the fourth quarter annual results before making a change to our estimates.

Macquarie

• Maintains ‘Outperform' rating with target price of Rs 646.
• Plan of one to two launches per quarter in the curent financial year will help Sobha sustain its pre-sales numbers.
• It witnessed strong growth in Bangalore, however, saw mixed bag in other cities.

HSBC

• Maintains ‘Buy' rating with a target price of Rs 570.
• Sobha is likely to gain market share from unorganised players.
• Sales growth was led by strong performance in Bangalore and Cochin.

Also Read: Sobha Expects Some Relief For Real Estate Developers In Next 2-3 Quarters