HDFC Securities' research report on Sobha Developers
Sobha Developers Limited’s (SDL) FY20 annual report is more an annual ritual with clear cut disclosures and conservative treatment of real estate sales. The pre-sales for FY20 remained flattish at 4.1mn sqft. A few yellow flags do require further clarity in (1) SEBI emails seeking clarifications on certain business transactions done in earlier years (SDL has mentioned no adverse financial impact of it) and (2) related party dealings with promoter entity Sobha Projects and Trade Pvt Ltd. SDL, with a strong brand positioning, robust unused bank limits (Rs 15bn), and premium positioning in the residential segment, is well-placed to ride the COVID headwinds.
Outlook
We maintain BUY with a target price of Rs 348/sh.
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