Accumulate Sobha Developers; target of Rs 360: PLilladher

Prabhudas Lilladher is bullish on Sobha Developers and has recommended accumulate rating on the stock with a target of Rs 360 in its August 08, 2012 research report.

“Sobha reported revenues to the tune of Rs4.3bn, YoY growth of 56%, while a sequential decline of 17%. Revenues, however, consisted of Rs950m of proceeds from a land sale in Pune. Hence, the POCM revenues from Real estate stood at Rs2.42bn, while Rs958m was from the contracts & manufacturing division. The company’s POCM revenues have remained in the Rs2-2.5bn band and are likely to inch-up in H2FY13, with several projects likely to reach the completion threshold.”

“Sobha’s EBITDA margins stood at 27.7% for Q1FY13 as against 23.7% in Q1FY12 and 38% in Q4FY12. With margins on the land sale component being low at 16%, overall margins for the company look subdued. However, excluding the same, margins stood at 29%. The company’s PAT for the quarter stood at Rs450m, YoY growth of 73% and a sequential decline of 54% on account of high margin land sales in Q4FY12. Although launches were subdued for the quarter, with only a small villa launch in Coimbatore, sales momentum continued at the company’s previously launched projects, thereby, ending the quarter at 0.83m sq.ft, representing 25% YoY growth and a marginal sequential decline. Sales from the Gurgaon project witnessed a strong sequential increase of 24%. Realizations, too, remained firm at Rs5,737, an increase of 26% and 7% on a YoY and QoQ basis, respectively, resulting in total sales of Rs4.79bn. The company’s sales guidance for FY13 stands at Rs20bn as against sales of Rs17bn clocked in for FY12.”

“Sobha’s NAV stands at Rs39.8bn, translating to Rs406/share. We attribute a 20% discount to this to arrive at the value of the real estate business. To this, we are adding the value of the contract business which is calculated at Rs35/share which translates to a target price of Rs360. We maintain ‘Accumulate’ on the stock,” says Prabhudas Lilladher research report. 

Public holding more than 90% in Indian cos

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