Sobha Ltd - Sales momentum sustains - ICICI Securities

As per Sobha's Q4FY22 operations update, the company has achieved gross sales bookings of 1.34msf worth Rs11.1bn which were flat on YoY and QoQ basis in volume terms and up 4% YoY and 6% QoQ in value terms aided by the company achieving its highest ever gross realisation of Rs8,265/psf. The Bengaluru market was again the key contributor with sales volumes of 0.93msf and contributed 69% of the total volumes followed by Gurugram which accounted for 17% of volumes. For FY22 overall, the company has clocked its best ever annual sales performance with gross sales bookings of 4.91msf worth Rs38.7bn. We expect this momentum to continue into FY23-24E with ~13msf of planned launches, and model for 5.9/6.4msf of sales volumes in FY23/24E. We maintain our BUY rating with an unchanged Mar'22 SOTP-based target price of Rs902/share. Key risks to our call are a slowdown in residential demand and a rise in the company's debt levels.

- Bengaluru and Gurugram markets enable strong operational performance: Sobha's Q4FY22 gross sales bookings of 1.34msf worth Rs11.1bn were flat on YoY and QoQ basis in volume terms and up 4% YoY and 6% QoQ in value terms aided by the company achieving its highest ever gross realisation of Rs8,265/psf. In Q4FY22, the Bengaluru market was again the key contributor with sales volumes of 0.93msf and contributed 69% of the total volumes. The Gurugram market also maintained its strong performance with volumes of 0.23msf (up 22% QoQ) and contributed 17% of sales volumes for the quarter with the Chennai and GIFT City markets also seeing traction. During the quarter, the company launched one project called "SOBHA Brooklyn Towers Wing 3" in Bengaluru spread over 0.20msf. The company has also mentioned that its consolidated net debt levels have reduced further QoQ (the company had net debt of Rs26.5bn as of Dec'21 with net D/E of 1.1x).

- Record FY22 sales bookings, expect further growth in FY23-FY24E: For FY22 overall, the company has clocked its best ever annual sales performance with gross sales bookings of 4.91msf worth Rs38.7bn. We believe that the company's FY22 sales performance is commendable considering the second/third Covid wave impact across India, and expect momentum to sustain heading into FY23-24E as well on the back of new launches. As per company, it is on track to get approvals for ~13msf of planned launches in FY23E of which inventory will be released for sale in phases. Low mortgage rates, stable property prices and robust hiring outlook for IT/ITeS and financial services, especially in South India, are expected to support residential housing demand in FY23-24E as well. We model for Sobha to clock gross sales booking value of Rs47.1bn and Rs49.0bn in FY23E and FY24E, respectively.

Shares of Sobha Limited was last trading in BSE at Rs. 712.95 as compared to the previous close of Rs. 709.10. The total number of shares traded during the day was 40462 in over 2374 trades.

The stock hit an intraday high of Rs. 731.95 and intraday low of 709.00. The net turnover during the day was Rs. 29229445.00.

Source : Equity Bulls

Keywords

Sobha INE671H01015 Q4FY22 FY2022 OperationalUpdate ICICISecurities