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Sobha Developers eyes Rs 1500cr rev; 25% growth in FY12

Published on Tue, Aug 09, 2011 at 17:53 | Source : CNBC-TV18

Updated at Tue, Aug 09, 2011 at 18:41

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JC Sharma, managing director , Sobha Developers

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Sobha Developers announced its first quarter results for the quarter ended June 30, 2011. The company's net profit was down at Rs 31 crore versus Rs 34 crore, year-on-year, YoY. Its net sales were up at Rs 317 crore versus Rs 315 crore, YoY.

In an exclusive interview with CNBC-TV18, JC Sharma, the managing director of Sobha Developers talks about his company's first quarter performance. He also elaborates on their future plans.

Below is a verbatim transcript of his interview with CNBC-TV18's Sonia Shenoy. Watch the accompanying video for more.

Q: You had a target of about 3.3-3.5 million square feet. Do you think that can be met? Also, take us through your FY12 sales guidance?

A: We are quite confident that it will be met. The last two-and-half months of our performance, gives that kind of comfort that despite the rate hikes and the challenging environment, the sales volumes have picked up momentum. We have already done more than 1 million square feet right now which gives us this kind of comfort.

Q: What is critical to this 3.3 million square feet target? Can you give us a status check on the new launches that you have in Gurgaon and in Bangalore?

A: In the first quarter, we have already done new launches to the extent of about 3.5 million square feet. In the month of July, we successfully launched in Gurgaon as well. Next month we should be able to do launches in Chennai as well. So the cumulative new launches in Bangalore, Gurgaon and Chennai as well as in other existing places gives us that required comfort, that our guidance of achieving 3.3-3.5 million square feet of new sales should be achievable.

Overall, the environment fortunately has turned favorable. Customers are indeed accepting the current prices wherever we are selling our products and we see the volume growth in every center where we are operating.

Q: On this quarter's performance, what have the operating profit margins come in at and how have the realisations looked this quarter versus what you did last quarter?

A: This quarter, the realisations have been 4,500 odd numbers which is about 10% plus higher than what we achieved in the last financial year. This does not include our Gurgaon new sales. So with Gurgaon's villas also getting added from this quarter onwards, the average realisation should also improve. We feel that improvement in realisations and in the volume should take us to the targeted new sales of Rs 1,500 crore.

Q: With Rs 1,500 crore as your sales target for FY12, what kind of a bottomline growth are you planning to do?

A: Last year, we did Rs 180 crore with a tax provision of about 25%. This year we will be in the full tax bracket of 30% plus. Despite that, we feel that there should be a corresponding 25% or so growth in our net profit as well.

Q: You had reduced a part of your debt as well. Where does the net debt stand currently and how much more of a deleveraging can we see in FY12?

A: Our net debt has gone up by about Rs 100 crore in the last quarter which is primarily due to money needed to launch new projects especially in the Delhi market. Going forward, we have started seeing reduction in the debt and we feel that by the year end from the current debt equity, it should be reduced to 0.5.

Q: Apart from this Sobha International City in Gurgaon and Sobha City in Bangalore, anymore new launches that we can expect from this stable?

A: We are launching two more projects in Bangalore this month and we should be launching two projects in Chennai next month.

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