Buy Sobha; target of Rs 652: HDFC Securities

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26 Aug, 2025 12:21

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HDFC Securities' research report on Sobha

1QFY20 Revenue/ EBITDA/ APAT came in 97/74/72% higher YoY at Rs 11.8/2.3/0.9bn. The company maintained pre-sales momentum with 1.06mn sqft of sales by volume (up 11% YoY) in 1QFY20 valued at Rs 7.78bn. SDL expects the sales momentum to buildup during FY20E. Bengaluru continues to be the key pre-sales driver with pre-sales volume/value of 0.74mn sqft/Rs 5.4bn. During 1QFY20, SDL tied up land parcels to the tune of 143 acres across geographies including Bengaluru, Gurugram, Hyderabad and Trivandrum for Rs 1.5bn consideration. In FY20E non-Bengaluru pre-sales is expected to be driven by Kochi, Pune, Gift City, Chennai and NCR. Net debt has increased by Rs 3.2bn QoQ to Rs 27.5bn and net D/E is now at 1.2x (vs 1.09x QoQ). This increase is debt was primarily towards acquisition of 143 acres of land parcels across geographies for its future projects and a one-time consideration paid to JV partner in Gurugram project towards the integrated club-house. SDL has guided that debt may increase marginally from current levels but the company aims to maintain net D/E at 1.1x levels at the end of FY20E.

Outlook

We maintain BUY post a stable quarter. Our SOTP-based TP is maintained at Rs 652. We have increased our EPS estimate by 2/2.1% for FY20/21E.

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