Buy Sobha; target of Rs 500: HDFC Securities

It seems that nationwide lockdown has not much impacted the fertilizer sector. In May 2020, the Indian Fertiliser industry has witness sales growth of 25% to 5 million tonnes as compared to 4 million tonnes in the same month last year.  Coromandel International and Chambal Fertilisers have seen major sales growth in the sector. The research firm Prabhudas Lilladher is bullish on 5 stocks in the sector and among that they expect stock Insecticides India may see the upside of 82 percent, report dated June 09, 2020.

HDFC Securities' research report on Sobha

Sobha Developers’ (SDL) 4QFY17 net profit came in 30.6% ahead of estimates. This was led by contracting business, with 37% revenue contribution vs avg 30% historically and two new projects hitting revenue threshold, adding Rs 630mn in realty segment.

Outlook

Whilst SDL has not shared FY18E pre-sales guidance owing to RERA and GST headwinds, we model for 3.3mn sqft pre-sales in the base case, going by the cross-cycle average of 3mn sqft pre-sales. Upgrade to BUY with an increased NAV of Rs 500/share (largely on account of 400bps reduction in WACC to 16.1%).

For all recommendations, click here

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.

Read More