Sobha Developers targets Rs 2000cr sales in FY13

Sobha Developers reported a consolidated net profit of Rs 45 crore year-on-year in the first quarter of the current fiscal. The company's consolidated net sales went up higher than expected to 55.8% YoY to Rs 432 crore during the same quarter. However, sales dropped by 17.24% QoQ.

In an interview with CNBC-TV18, JC Sharma, VC of Sobha Developers said the company is hopeful about sustaining the current margins and maintains its sales guidance of Rs 2,000 crore for FY13. He further stated that the underlying demand is strong in key markets and this will help them realize their guidance.
The company's debt has gone up by Rs 45 crore in Q1 and they have generated Rs 75 crore FCF in the current quarter, informed Sharma.
Going ahead, Sobha Developers is eyeing strong sales in Gurgaon where realisations are strong at Rs 9000 per sq ft.
 
Here is the edited transcript of the interview on CNBC-TV18. Q: I am talking to you about your margins for this quarter, whether you feel that you can really sustain this as far as the next fiscal is concerned?
A: Of course yes. We have already considered the input cost increase in all our projects and we do believe that the current margins, which are hovering around 40% in our core real estate operations should be able to sustain going forward as well. Q: We are looking at your presale figures, they have been very strong this quarter despite being a seasonal weak quarter for real estate companies. What run rate you think you can manage for the next couple of quarters?
A: We believe that the underlying demand in our markets remain quite strong. We have already given a guidance that this year we should be doing new sales of Rs 2,000 crore plus. We are confident that we should be able to achieve this target in this financial year like we did in the last financial year and this should also get reflected in our P/L account from the third and fourth quarters.
_PAGEBREAK_ Q: Do you feel that you are on track to really meet those presales targets of Rs 2,000 crore for FY13?
A: Based on our first three months' performance or whatever sales we have done in the last month, we do believe that we are well on course to achieve the guidance that we had provided in the beginning of this financial year. Q: When we spoke to you a couple of quarters ago you had told us about your expansion into North India. You had spoken about your Gurgaon expansion plans, what are the average realisations like in Gurgaon at this point?
A: Currently it is in excess of Rs 9,000 per square feet and despite the price increase that we have introduced recently, the volume remains good. In fact, one of the reasons for having higher realisations is that we are performing as per our target. As far as the Gurgaon market is concerned, we hope to do about Rs 400,000-500,000 square feet of new sales in that market. Q: Tell us about your debt. You have reduced your debt this quarter, what is the targeted debt for FY13?
A: Our debt equity currently stands at 0.58 and in this quarter our debt has gone up by about Rs 45 crore. We believe, as things stand today, we have been generating free cash flows from our operations.
In this quarter also we have generated about Rs 75 crore through our operations, but out of that we have invested about Rs 55 crore to buyback our partner's share in Trichur. At the same time, we have been investing in new fixed assets as the current ongoing projects keep going up. These will be the one-time investments we will have to incur to ensure that we sustain the growth momentum.
Going forward, we believe that we should be able to maintain our stated debt-equity between 0.5-0.6.