Sobha Developers Q1 net up 11%, sales volume moderates

Moneycontrol Bureau

South-based realty company Sobha Developers reported a growth of 11 percent year-on-year growth in its first quarter (April-June, FY14) consolidated net profit to about Rs 50 crore. Total sales rose 7 percent y-o-y to Rs 461 crore. The moderation in sales growth apparently capped rise in the net profit.
The results were way below the market expectation. Analysts on an average had expected profit after tax to grow by 28.4 percent year-on-year to Rs 57.8 crore, according to a CNBC-TV18 poll. Sobha shares on Thursday hit 52 weeks low to close at Rs 282 on NSE. In the previous quarter, sales rose 12 percent y-o-y. Must read: IRDA eases premium payment mode for policyholders
However, the company managed to limit its total expenditure, which rose nearly  4 percent to Rs 339 crore.
"Notwithstanding a slowing economy and sliding rupee, there was a sustained momentum in sales. The company during quarter sold 9.2 lakh square feet of new space compared with 8.4 lakh square feet in the corresponding period of last year. The average sales price realization improved to Rs 6,548 per square feet as compared to Rs 5,737 per square feet a year back," said J C Sharma, vice chairman and managing director at Sobha Developers. Also read: Super regulator panel raises concern on bank credit quality
During the quarter, the company launched two new projects measuring 4 lakh square feet. On the other hand, the company released about 5.3 lakh square feet of area from existing projects for sale. It also completed and handed over two contractual projects measuring 1.3 square feet of developable area.
Sobha of late has expanded its branches beyond Bangalore. In the past 3-4 years, the company has strategically diversified its operations into new cities like Chennai and NCR. It generated 35 percent of its new area sold outside of Bangalore.
"We would be launching three projects during the current quarter, namely, HAL Road property in Bangalore, Palazhi property in Calicut and Nadanahalli property in Mysore, comprising a total saleable area of around 10 lakh square feet," Sharma said.