Stock Of The Day: Sobha Surges After Board Nod To Rs 2,000-Crore Rights Issue — Key Levels

Shares of Sobha Ltd. surged 7.6% to hit record high on Thursday after its board approved a Rs 2,000 crore raise through the proposal for the issuance of equity shares by way of rights issues to the eligible equity shareholders of the company.

The rights issue will open on June 28 and close on July 4. According to Sobha, the eligible equity shareholders will receive six rights equity shares for every 47 equity shares they hold on the record date.

The company has set the issue price at Rs 1,651 per share, a 20% discount from Wednesday's closing price of Rs 2,063.9 apiece on the BSE.

Use Of Net Proceeds From The Issue

• The company plans to repay or prepay certain borrowings worth Rs 905 crore, either in full or in part.

• Funding certain project-related expenses for ongoing projects and forthcoming projects worth Rs 212.4 crore

• The purchase of equipment and machinery for Rs 210 crore.

• Funding the acquisition of unidentified land parcels and general corporate purposes for Rs 658.6 crore

Key Levels To Watch

• Support: Rs 1,975 (four-day low)

• Resistance: Not available since stock is at a life high

The Bengaluru-based Sobha Ltd.'s net profit fell 85.6% for the fourth quarter of fiscal 2024, missing analysts' estimates. The real estate player's net profit declined to Rs 7 crore in the three months of March 2024, as compared with Rs 48.6 crore over the same period last year. Analysts polled by Bloomberg had estimated a profit of Rs 52.1 crore for the quarter.

The company's revenue was down 36.8% to Rs 762.8 crore, as against the Rs 1,180.8-crore consensus estimate of analysts tracked by Bloomberg.

Other Operational Highlights

• Total sales value up 2.8% to Rs 1,504 crore.

• Total collections increased by 5.3% to Rs 1,498 crore.

• Average price realisation was up 13.4% to Rs 11,230 per square feet.

• Launched four new projects, with a total saleable area of 3.18 million square feet.

In FY24, the company launched six residential projects and registered a growth of 27.8% to Rs 6,644 crore in terms of sales booking.

Analyst Recommendations

Shares of the company surged 7.62% to hit record high of Rs 2,220 apiece on the NSE. The stock was trading 5.34% higher at Rs 2,172.60 apiece as of 11:05 a.m., compared to 0.29% gains in the benchmark Nifty 50.