Buy Sobha Developers - Geojit BNP Paribas

Retain 'buy' on Sobha Developers – TP Rs.329

- Company sold 0.86 million sq ft in Q4FY12. Sales are up 31.5% yoy and 5.4% qoq.

- Sales in FY12 are 3.28 million sq ft, which has increased 18% yoy and surpassed sales guidance of 3 million sq ft for the year. Sales revenue at Rs.17.01 billion as against the target of Rs.15 billion.

- On a consolidated basis, average sales price was lower by 1.7% qoq but higher by 19.6% yoy.

- Looking ahead, debt reduction and delivery data are key catalysts for Sobha. The company has guided a net debt target of Rs.11 billion as against debt of Rs.12.7 billion as on 3QFY12. Debt reduction to the target level will be a major positive for the stock price.

- 'Buy' rating on the stock is maintained with a target price of Rs.329 over one year.

- Key risks to the target price are slower execution and failure to reduce debt as guided.

Source : Equity Bulls

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