BackSobha Q4 results: Share price surges over 9% on strong net profit growth
During Q4FY23, Sobha Ltd achieved its highest ever quarterly sales value of ₹1,463 crore, with best average price realization of ₹9,898/sq.ft. and recording highest SBA sales at 1.48 mn sq.ft.
PremiumSobha Ltd share price surged over 9% in early morning deals on Tuesday after the real estate developer reported strong earnings for the quarter ended March 2023. The stock price jumped as much as 9.33% to an intraday high of ₹554.90 apiece on the BSE.
The real estate developer Sobha reported a consolidated net profit of ₹48.6 crore in Q4FY23, registering a massive growth of 242% from ₹14.20 crore in the corresponding quarter of last fiscal.
The company’s revenue from operations increased 70.3% YoY to ₹1,210 crore driven by higher sales, the highest ever collections and healthy customer deliveries.
“The enhanced focus on driving operations at scale and higher efficiency helped the company boost its sales and operational performance," Sobha Ltd said in a regulatory filing.
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During Q4FY23, Sobha Ltd achieved its highest ever quarterly sales value of ₹1,463 crore, with best average price realization of ₹9,898/sq.ft. and recording highest SBA sales at 1.48 mn sq.ft.
Bangalore continued to dominate the sales with 63% followed by NCR at 19% with GIFT City, Kerala and Tamil Nadu witnessing steady growth, the company said.
The company’s board recommended a dividend of ₹3 per share for FY23.
It also saw highest ever net debt reduction in a year aided by strong operational cashflow now at ₹1,640 crore with Net Debt-Equity ratio down to 0.66.
Global brokerage house Jefferies believes Sobha’s margins have been a drag for the P&L, though execution has picked up, as reflected in 16-quarter high revenues and profits should follow. Low inventories and strong demand imply 15-20% FY24 pre-sales growth target is highly launch-dependent.
The weak margin performance drives a 4% cut to FY24 earnings, Jefferies said.
It maintains Buy rating and cut the target price to ₹683 per share from ₹750 earlier as it builds in somewhat lower margins on residential business. It increased presales estimates by 4%/5% for FY24E/ FY25E and said that strong cash generation/debt reduction over the past 2 years remains the key positive.
ICICI Direct maintained its Buy rating on the stock and increased the target price to ₹891 per share from ₹808 earlier, factoring in higher consolidated net debt reduction and higher launch volumes and realisations across projects.
Motilal Oswal Financial Services reiterated its Buy rating on the stock and raised the target price to ₹750 per share.
“Sobha is progressing well on the pre-sales growth trajectory. The steady cash flow is enabling debt reduction and renewed focus on new land investments. However, with the delay in launch of Hosur project and the launch at Hoskote still more than a year away, we do not expect any material re-rating triggers from the land valuation perspective in the near term," it said.
With higher-than-expected launches in FY24, the brokerage increased its FY24/FY25 presales estimate by 7%/11% to ₹6,000 crore/ ₹6,800 crore. On the P&L front, it maintained revenue estimate, but reduced EBITDA by 36%/24% for FY24/25, reflecting the margin pressure on the contracting business.
At 10:00 am, the shares of Sobha were trading 4.83% higher at ₹532.00 apiece on the BSE.
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