1
Please refer to important disclosures at the end of this report
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Sobha is an established player in real estate development and contract
construction in Bangalore. The group has a track record of project delivery
within reasonable timelines. Sobha’s in-house project execution and backward
integration provides better control over cost, quality and timelines. The company
has refrained from giving any sales volume guidance as it looks for the situation
to stabilise post GST, RERA implementation. However, it expects to sustain sales
momentum with planned new launches ahead. Sobha plans to launch five to six
new projects with developable area of 2 msf in H2FY18 in Bengaluru, Chennai,
Mysore, Trissur and Kochi. Consequently, Sobha expects volumes to improve
from here on. With the demand scenario expected to improve with rising
consumer confidence amid RERA and well planned new launches, we expect
sales volumes to increase going ahead. Sobha received two contractual orders
worth `521.5cr from LuLu Group & Biocon during H1FY18 boosting its order
book to ~`1517cr. Consequently, the management has guided for contractual
revenues to the tune of ~`800-1000cr in FY18 & FY19. With strong order
accretion, robust order book and strong execution, we expect contractual
revenues to grow further. The debt equity ratio is maintained in the range of
0.63x-0.85x over last 5 years. It has reported revenue growth of 10% from FY12-
17 and has maintained average dividend payout of 30% over last 5 years. The
company has a ROE of 6.72% and it is currently trading at a valuation PE of
31.83x of TTM earnings. Hence BUY.
BUY
CMP `590
0.9
Reuters Code
SOBH.NS
SOBHA:IN
10
BSE Sensex
32,859
Nifty
10,123
Face Value (`)
Realty
Market Cap (` cr)
5,677
52 Week High / Low
636.45/242.20
Avg. Daily Volume
211,178
Vaibhav Agrawal
022 3935 7800 Ext: 6808
[email protected]gelbroking.com
Sobha Ltd
Others | Realty
Dec 01, 2017
2
Sobha Ltd |Realty
2
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
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Disclosure of Interest Statement Sobha
1. Financial interest of research analyst or Angel or his Associate or his relative No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives No
3. Served as an officer, director or employee of the company covered under Research No
4. Broking relationship with company covered under Research No
Ratings (Based on expected returns Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
over 12 months investment period): Reduce (-5% to -15%) Sell (< -15)