Buy Sobha; target of Rs 600: HDFC Securities

HDFC Securities' research report on Sobha

Sobha Ltd. (SDL) reported an operationally robust 3QFY21 with pre-sales volume of 1.13msf (+7%/+27% YoY/QoQ). Pre-sales value grew by 22% YoY to Rs 8.9bn. Real estate collections have also improved to Rs 6.6bn (vs Rs 5bn in 2QFY21). With 14.4 msf of new launch pipeline, management expects further momentum in sales as largely the current pre-sales is driven by older projects under execution. We maintain BUY on SDL as we expect the strong momentum in pre-sales to continue.

Outlook

We leave the TP unchanged at Rs 600/sh and cut FY21 EPS by 49%, owing to lagged completions and slow contract business execution.