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Research
Sobha Developers - On track to meet FY14 guidance - JM Financial
Posted On : 2013-07-07 10:33:54( TIMEZONE : IST )
Fresh sales of Rs. 6.03bn (+26%YoY/-11%QoQ) is 23% of FY14 fresh sales value guidance set by management. This is in-line with history of 1Q accounting for 22-23% of full year sales. Bangalore volumes stood at 66% of the total, new locations contributed 16% (vs 23% in 4Q) as NCR sales dipped. Blended realisations at Rs. 6,548 was up 14%YoY and 4%QoQ. New launches of 0.56mn sq ft vs 0.27mn in 1QFY12. Maintain BUY.
1Q fresh sales Rs. 6.03bn at average realisation of Rs. 6,548: Sobha clocked fresh sales of Rs. 6.03bn - up 26% vs last year. Growth was balanced led by 10% volume and 14% realisation growth. This constitutes 23% of full year guidance (in line with history of 1Q being 22-23% of full year sales). Slowdown in NCR (high ticket-size sales) was offset by better realisations in Bangalore micromarket. Average realisations of Rs. 6,548 was up 14%YoY and 4%QoQ. New launches in 1Q at 0.56mn sq ft (1QFY13: 0.27mn; 4QFY13:1.50mn).
Bangalore sales volumes up 16% YoY: Bangalore continues to be a dominant market accounting for 66% of total volumes in 1Q (FY13:64%). Bangalore realisations are higher than average realisation for company as Sobha Indraprastha (Bangalore) forming substantial part of Bangalore volumes is currently selling at c.Rs. 10,500/sq ft. Bangalore market would have contributed over 72% to the total sales value during the quarter, as per our workings. Chennai realisations largely stable at c.Rs. 5,100/sq ft.
NCR sales dipped, all geared up for Kochikode foray: Management commentary highlighted: a) NCR luxury residential market has seen some weakness as Sobha products available there are high ticket size products, it expects demand to recover in 2H, b) It is also set to launch a residential project in 2QFY14 in Kozhikode, supporting our thesis that new locations (forayed in or after FY12) will drive growth for Sobha in future along with stable Bangalore market sales.
Recommend BUY with Mar'14 target price of Rs. 475: We continue to like Sobha Developers for its sustained superior operating performance, quality management and strong fundamentals. Recommend BUY with Mar'14 target price of Rs. 475.
