HDFC Securities Limited recently issued Buy Call on Sobha Ltd, along with a new Target Price for the company. Now, let’s examine the research reports and explore their overviews.
Sobha Ltd is a renowned real estate development company founded in 1995 by Mr. P.N.C. Menon. Headquartered in Bangalore, India, Sobha has established itself as one of the leading players in the Indian real estate market. The company operates primarily in India, serving various regions across the country.
Sobha specializes in developing residential and commercial properties. They have successfully completed numerous projects, including luxury apartments, villas, row houses, and plotted developments. The company is known for its commitment to quality and attention to detail in every aspect of construction.
First of all, let’s take a look at the current share price of Sobha Ltd. To visualize these changes, we can refer to the Sobha Ltd Share chart which displays the historical share prices, indicating the ups and downs over time.
HDFC Securities Limited’s Report Overview
Sobha Ltd (SDL) achieved record-breaking annual presales of 5.7 million square feet (msf) in terms of both value and volume, amounting to INR 52 billion, marking a 34% year-on-year increase. This exceptional performance was primarily driven by the successful launch of 4 msf of new projects. For the fiscal year 2024, SDL anticipates a presales growth of 15-20%, propelled by a minimum of 7 msf of upcoming launches, scheduled to commence from the second quarter of FY24. Of the total launches, 5 msf is planned for Bengaluru, 1 msf for the NCR region, and another 1 msf for other markets.
SDL faced a challenge in terms of its EBITDA margin, which stood at 11.2% in FY23, reflecting a decrease of 456 basis points year-on-year. This decline was attributed to high-cost legacy contractual projects and previous presales, where higher raw material costs were recognized. However, SDL expects an EBITDA margin turnaround starting from Q3FY24.
In terms of land monetization, SDL intends to initiate the process in FY24 for its Hosur property, planning to launch a plotted development project. Additionally, for the 200-acre Hoskote property, the launch plans for the initial phases will be finalized by the end of FY24.
To fuel its business development initiatives, SDL plans to allocate INR 2-3 billion in FY24, primarily through joint development agreements (JDs) and joint venture agreements (JVAs), with funding sourced from robust internal accruals.
SDL achieved its highest-ever real estate collection of INR 43 billion in FY23, representing a 36% YoY growth, bolstered by robust presales and timely project deliveries. Consequently, the company’s net debt reduced to INR 16.4 billion, a decrease of INR 5 billion compared to FY22. However, in FY24, SDL intends to utilize its strong cash flow primarily for growth rather than net debt reduction.
Considering the near-term margin pressures, we have revised our estimates, but maintain a BUY rating on SDL, with an unchanged target price (TP) of INR 935. For more information Read the PDF..
HDFC Securities Limited Buy Call: Sobha Ltd
Sobha Ltd’ current market price is Rs 507. Recently, HDFC Securities Limited recently issued Buy Call on Sobha Ltd with a new Target Price of Rs 935.
|AUTHOR||HDFC Securities Limited|
|DATE||30 May 2023|
|Current Price||Rs 507|
|TARGET Price||Rs 935|
Here’s a table summarizing the ownership structure of the company.
|FIs & Local MFs||13.78||13.63|
|Public & Others||19.17||20.35|
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