India’s real estate business is expanding, at $180 billion in 2020, and is expected to reach $1 trillion by 2030. Housing demand increased by 25% in 2023, while office space absorption reached 38 million square feet. The sector accounts for around 13% of India’s GDP.
With a market capitalization of Rs 22,138.91 crore, the shares of Sobha Limited were trading in red at Rs 2069.95 per share, increasing around 2.44 percent as compared to the closing price of Rs 2,020.70 apiece.
Looking forward to the company’s financial performance, revenue plummets by 37 percent, from Rs 1,209.93 crore in Q3 FY23 to Rs 762.86 crore in Q3 FY24. During the same period, net profit dropped by 86 percent, from Rs 48.58 crore to Rs 7.03 crore.
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HDFC Securities, one of the well-known brokerages in India, gave a ‘Buy’ call on the real state stock with a target price of Rs 2,639 apiece, indicating a potential upside of 27 percent from Thurday’s price of Rs 2,069.95 per share.
Here’s the reason for the bullish target:
● Sobha’s parent company is injecting over Rs 10 billion as growth capital into its Indian entity through a Rs 20 billion rights issue, reflecting promoter confidence in robust Indian real estate demand.
● The group targets Rs 300 billion presales by FY30, with Mumbai expected to contribute Rs 100 billion, leveraging the premium MMR and NCR markets for a stable growth trajectory
● SDL maintains a 15-25% pricing premium over peers due to customer centricity, strong brand pull, in-house construction, and high-value delivery, ensuring consistent demand despite setbacks.
● Financial institutions support SDL, which has significantly deleveraged its balance sheet and is on track to be net cash positive, focusing on residential development without major land or commercial capex.
The firm produced its highest-ever collection in FY24, up 9.7 percent from FY23, with real estate collections increasing by 16.9% to Rs. 50.34 billion and contracts and manufacturing collections at Rs. 7.62 billion.
Sobha Limited specializes in the building, development, sale, management, and operation of townships, housing developments, commercial properties, and other associated businesses.
The company works in two segments: real estate and contractual and manufacturing.
Written by:- Abhishek Singh
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