Hold Sobha; target of Rs 361: Axis Direct

Axis Direct's research report on Sobha

Bangalore market continued to be the key performer, contributing ~70% to pre-sales inQ4FY17.High-ticket projects nearing completion such as Palladian, Grandeur and Indraprastha posted improved pre-sales velocity. Pre-sales run-rate in Dream Acres project (affordable housing) has stagnated to 40-50 units/ month (vs. 60-70 units/ month last year). No new project was launched inQ4.

Outlook

Sobha’s pre-sales grew 35% QoQ in Q4FY17 (0.7msf/ Rs 5 bn), partially aided by strong pre-sales in Gurgaon market (driven by pent-up demand and developments on Dwarka Expressway). However, volumes are yet to reach steady state (down 6% YoY).