Accumulate Sobha Developers; target Rs 409: P Lilladher
Prabhudas Lilladher is bullish on Sobha Developers and has recommended Accumulate rating on the stock with a target price of Rs 409 in its October 4, 2012 research report.
October 04, 2012 / 19:45 IST
Prabhudas Lilladher is bullish on Sobha Developers and has recommended Accumulate rating on the stock with a target price of Rs 409 in its October 4, 2012 research report.
“Sobha Developers’ volumes grew 19% sequentially to 0.94m sq.ft, the best ever it has achieved in a single quarter. In terms of value, sales stood at Rs 5.2bn, QoQ growth of 10% and YoY growth of 8.6%. For H1FY13, the company has already achieved the midway mark as compared to its sales guidance for FY13 in terms of volumes and value. In volume terms, the sales for H1FY13 stand at 1.78m sq.ft as compared to a guidance of 3.75m sq.ft, while in terms of value, sales are at Rs 10.06bn as against a target of Rs20bn for the year.Excellent response to new launches: During the quarter, the company launched two projects, one in Bengaluru - Sobha Grandeur (-0.36m sq.ft) and one in Thrissur - Sobha Jade (-0.5m sq.ft), both of which have received a very good response. Sales in Bengaluru increased by 14% QoQ, while sales in Thrissur increased by 160% QoQ.The company has also been releasing additional area for sale in its previously launched projects like Forest View and Sobha City. Its Gurgaon project has also been performing extremely well, maintaining a run-rate of 0.13m sq.ft per quarter. Till date, the company has sold ~0.6m sq.ft at the project.Deleveraging expected in second half: We expect debt levels to remain constant in H1FY13 on account of expenditure incurred towards project launches and acquisition of additional stakes in projects. However, the company’s debt reduction program is likely to restart in the second half of the fiscal. Sobha’s net debt which has reduced to levels of Rs11.4bn in March FY12 from Rs 12.1bn in FY11 is expected to reduce further to Rs 9.9bn in FY13. Correspondingly, its DER is likely to reduce to 0.57 in FY13 from 0.67 in FY11.Valuations: Sobha’s NAV stands at Rs43.1bn, translating to Rs 441/ share. We attribute a 15% 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 Rs 35/share which translates to a target price of Rs 409. We maintain ‘Accumulate’ on the stock,” says Prabhudas Lilladher research report.FIIs holding more than 30% in Indian cos Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.To read the full report click on the attachment 
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