Aim to grow beyond south India, focus on Gurgaon: Sobha

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26 Aug, 2025 12:21

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Detailing the first quarters muted performance J C Sharma, Vice Chairman and Managing Director, Sobha told CNBC-TV18 that the profits were down mainly due to reduction in contracting revenues and not because of real estate revenue recognition.He said with the launch of new project in Gurgaon next quarter, the real estate market for them should start improving in other cities too besides Bangalore which has been holding firm for the company in terms of sales. Chennai too has seen some improvement, said Sharma.The company has done about 700,000 square feet out of 844,000 sq ft of new sales in the Bangalore alone in the last quarter, said Sharma.Below is the transcript of J C Sharma's interview with Nayantara Rai on CNBC-TV18. Q: If you can first of all take us through the contours and the results that have been announced by you, the highlights?A: This time while we have announced the topline of about USD 4.63 billion, with a profit of about Rs 45 crore. The profits are down by 20 percent primarily on account of steep reduction in our contracting revenue by about close to Rs 200 crore. So, we are down not on account of the real estate’s revenue recognition but unfortunately on account of our contracting revenues which have come down steeply, while the order book on that front remains quite satisfactory.  However, it will take time for us to start recognizing the revenue and catch up in the next subsequent three quarters.We believe that as far as the real estate revenues are concerned, with the improvement in our operational cycles from this first quarter onwards, as the year passes by, things should start improving. The operating margins are as strong as they used to be, there is a control over the costs but the volumes are not picking up in other cities as much as in Bangalore. Bangalore has been doing quite well since last two quarters thanks to the launch of the Dream Acres but in other cities we have to catch up. We believe that with the launch of our new projects in Gurgaon, a 40 acre group housing scheme, hopefully in the next quarter the Gurgaon market or the entire market also should start improving.Q: You are saying that the contraction in profits is not because of sales but because of revenue recognition. Of course your revenues are recognized in proportion to the project being completed but if you can give us a sense on your sales, how they have been doing because we keep hearing bad news about real estate and how there are no sales that are taking place across the country? A: It is a good point, that is what I was going to tell you that the Bangalore has been holding firm as far as we are concerned. Even now also in this environment we did about 700,000 sq.ft out of 844,000 sq.ft of new sales in the Bangalore alone in the last quarter.We have also improved our numbers in Chennai market also and as I was about to tell you, in the NCR market also because we didn’t have a Dream Acres kind of a product, in that market we have been only selling villas and row houses. So, to complement that, once we get into the group housing scheme, although currently the sales are down but it should improve and that is where we have given the guidance of 4 million sq.ft and we are quite confident that we are on track of achieving these numbers though you are right that the overall environment still remains tough for the industry.Q: If I could just ask you about the National Capital region (NCR), the new scheme that you are launching, we have seen developers across the board launching affordable schemes, be it in Noida, be it in Gurgaon, and they have not been successful and that is because the dynamics of the markets are such -- Why are you so confident that you will meet with success in Gurgaon when others have failed?A: It is all about the credibility and the quality of the offerings which the final buyers are looking for. We have a good track record of completing and delivering almost all the projects, more or less on time till date. As far as the ongoing projects are concerned, including our Gurgaon project, it is on track. Lots of investments have been made in sector 105, 106 and 109 in last three to four years. And lots of demand and inquiries we are getting from the people who visit our site but cannot afford. So, idea-wise, while recognising the current challenge that these projects take four to five years to complete and you launch it on a stage-wise basis - to bring a complementary product to capitalise on that goodwill and the quality what we have been able to offer to the NCR customers. And that gives us the confidence. You will also recall that couple of organised sector players who are not from NCR have done relatively better even in this market in the recent past.