Sell Sobha; target of Rs 1714: Geojit Financial Services

Geojit Financial Services is bearish on Sobha has recommended sell rating on the stock with a target price of Rs 1714 in its research report dated dated July 08, 2024.

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July 08, 2024 / 12:21 IST

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Geojit Financial Services research report on Sobha

Sobha Ltd., based in Bangalore, is a leading real estate company with a track record of completing ~136msft across 546 projects. The company's operations extend across 14 states, highlighting its significant presence in India's real estate market. In FY24, Sobha achieved a steady pre-sales growth of ~8%, with a booking value of Rs.6,644cr, (+28%YoY). The average realization was Rs.10,923 per sft, reflecting a 19% YoY growth. Sobha’s revenue declined by ~6% YoY in FY24 owing to lower completions, leading PAT to contract to 53% YoY at a margin of 2%. The revenue and collections for Sobha's contract and manufacturing segments fell by ~12% and ~22% YoY, respectively, in FY24. The company has a robust pipeline, with a total inventory visibility of 24.4msft, including a formidable residential development of ~16.85Msft to be launched in the coming 2 years. Sobha's residential segment stands on a solid footing with a healthy pipeline and strong demand.

Outlook

However, issues like slower revenue recognition, lower margins, and struggling subsegments contribute to uncertainty. Further, the stock has already been priced in the forthcoming projects. Therefore, we assign a SELL rating on the stock with a target price of Rs.1,714 based on NAV per share.

For all recommendations report, click here