HDFC Securities is bullish on Sobha has recommended buy rating on the stock with a target price of Rs 500 in its research report dated May 17, 2017.
HDFC Securities' research report on Sobha
Sobha Developers’ (SDL) 4QFY17 net profit came in 30.6% ahead of estimates. This was led by contracting business, with 37% revenue contribution vs avg 30% historically and two new projects hitting revenue threshold, adding Rs 630mn in realty segment.
Whilst SDL has not shared FY18E pre-sales guidance owing to RERA and GST headwinds, we model for 3.3mn sqft pre-sales in the base case, going by the cross-cycle average of 3mn sqft pre-sales. Upgrade to BUY with an increased NAV of Rs 500/share (largely on account of 400bps reduction in WACC to 16.1%).
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