Sobha Developers Ltd - Cashflows discomforts - Emkay

Reco: HOLD
CMP: Rs 363
Target Price: Rs 380

- Sobha DeSales booking remain healthy at 0.83msf for Rs 4.8bn. NCR project's sales booking at 1.35 lakh sf surprises positively, SDL affirms run rate despite of price hike of Rs 1000/sf (12%).

- Excluding realisation from land sale, company generated -ve operating cashflows of Rs 227mn predominantly due to lower collection from contract business & increase in fixed costs.

- SDL had cash outflow of Rs 550mn & Rs 250mn towards acquisition of stake in Sobha City, Thrissur project SPV and fixed asset resp. Net debt increased by Rs 464mn QoQ.

- Downgrade to Hold rating on increased TP of Rs 380. Lower cash generation from operations and recent run up in price leads to the downgrade.

Source : Equity Bulls

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