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Sobha Ltd stock up around 4% on robust Q3FY22 performance

In Q3FY22, Sobha Ltd achieved sales volume of 1.32 million square feet (msf), up 17% year-on-year, with sales value at  ₹1,048 crore, up 18% y-o-y. (File Photo: Mint)Premium
In Q3FY22, Sobha Ltd achieved sales volume of 1.32 million square feet (msf), up 17% year-on-year, with sales value at 1,048 crore, up 18% y-o-y. (File Photo: Mint)

  • For Sobha Ltd, Bengaluru continued to be the key market, contributing 72% to total sales volumes in Q3FY22. Sales volumes in the Bengaluru region stood at around 0.96 msf, up 20% sequentially and 22% y-o-y. Gurugram, Pune and GIFT CITY also performed well during the quarter

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Shares of Bengaluru-based real estate developer Sobha Ltd rose around 4% on the National Stock Exchange in opening deals on Monday after the company reported robust sales performance for the December quarter. In its operational update, the company said that including its share in joint development projects, it has achieved sales volume of 1.32 million square feet (msf), up 17% year-on-year (y-o-y) with sales value at 1,048 crore, up 18% y-o-y. Sequentially, however, sales dropped a marginal 2%. Average realisations on a per square feet basis rose 4% sequentially, but was flat compared to Q3FY21.

Bengaluru continued to be the key market for the company, contributing 72% to total sales volumes in Q3FY22. Sales volumes in the Bengaluru region stood at around 0.96 msf, up 20% sequentially and 22% y-o-y. In its press release, the company said that Gurugram, Pune and GIFT CITY have also performed well during the quarter and as a result for nine months they have already crossed sales volumes achieved during FY21. It added that Gurugram sales volume grew 97% y-o-y in Q3FY22.

The company continues to see deleveraging. Analysts at Antique Stock Broking Ltd said Q3FY22 is the fifth consecutive quarter of reduction in debt.

"Overall cashflow with signficant collections from real estate business. With focus on rapidly monetising its land bank and not expected to do significant investment in land, Sobha is expected to maintain such cashflow momentum and continue to deleverage (expected to surpass the target debt/equity of 1:1) going forward," the domestic brokerage house said in a report on 10 January.

According to the company, it is also seeing reduction in cost of borrowing.

Meanwhile, in the last one year, shares of Sobha Ltd have outperformed Nifty Realty, with returns of around 78%. The latter has given returns of 47% in the same span. Strong sales in the company's key market of Bengaluru, which is an IT hub, is said to have driven this rally. Even though the contribution of non-Bengaluru markets is seeing an improvement, higher exposure to just one region is a risk, analysts have cautioned.

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