Sobha impresses the Street with stellar Q2 earnings

Market


Bengaluru-based real estate developer Sobha Ltd recorded robust performance in the September quarter, with an increase in revenue contribution from non-Bengaluru markets. Reacting to the earnings announcement, the stock hit a new 52-week high of 980 intraday on Tuesday on the NSE.

Revenue grew 57% year-on-year (y-o-y) to 819 crore, with residential segment revenue rising 96% y-o-y to 654 crore. However, its contractual and manufacturing segment saw revenues decline by 13% y-o-y in Q2. Sales volumes rose 51% sequentially and annually in the September quarter to 1.35 million square feet (msf). Sales value at 1,030 crore improved 49% y-o-y.

Robust pipeline

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Robust pipeline

Although Bengaluru continues to be a key market for the company with sales volume of 0.80msf, comprising 59% of the total volume, contribution from non-Bengaluru areas has risen to 41% of total sales volume from 26% a year ago. What’s more is that the firm’s net debt declined by 39 crore in the September quarter, with the cost of debt coming down to 8.85% from 9.32% a year ago. Consequently, the key net debt/equity ratio improved marginally from 1.15 times in the June quarter to 1.13 times at the end of the September quarter.

The firm’s real estate cash inflow has grown 44% to 725 crore and the management expects real estate net cash flow of 7,213 crore from ongoing and completed projects for FY22. Its net operating cash flow of 312 crore during the first half of the FY22 is the highest in the last five years. Further, its completed unsold inventory at 0.44msf at the end of the September quarter is one of the lowest in the real estate sector.

In the past one year, shares of the company have risen by 226%, massively outperforming the S&P BSE Realty index, which has rallied 144% in the same span.

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