Nirmal Bang retains buy on Sobha Developers

Nirmal Bang has maintained its ‘buy’ rating on Sobha Developers with a target price of Rs 513 as it expects cash flows to improve further on the back of sustained presales momentum and pick-up in project execution which is likely to result in higher cash flow generation.

Sobha reported highest-ever quarterly pre-sales of Rs 670 crore for 4QFY13, up 45.2% YoY and 26.4% QoQ, largely driven by steady absorption in South India realty markets. For FY13, SDL reported Rs22.1bn of pre-sales.Further, in 4QFY13, SDL is believed to have witnessed major projects like International City (Gurgaon - villas) and Meritta (Chennai) crossing their threshold limits, leading to a likely sharp QoQ jump in real estate revenue, it said.