Hold Sobha; target of Rs 340: Axis Direct

Sobha reported new sales of 0.8msf (down 4% YoY and 9% QoQ) worth Rs 5.1bn (Sobha’s share at Rs 4.7 bn) in Q1FY17, which is in line with the company’s sales guidance of Rs 20 bn for FY17. Bangalore sales were down 13% YoY, as there was no new launch. Gurgaon sales improved significantly driven by official launch of Sobha City project; however, it remains to be seen if Sobha is able to maintain pre-sales momentum in Gurgaon in subsequent quarters, as it continues to be a muted market. We revise our rating to HOLD (BUY earlier) with TP of Rs 340, implying an upside of 5% from CMP of Rs 323. Management highlighted that it has a considerable launch pipeline in Bangalore, Chennai (already launched a project in Q2), Cochin &other markets, which will help achieve improved sales performance in FY17. 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.