Buy Sobha, target price Rs 891: ICICI Securities

ICICI Securities has buy call on Sobha with a target price of Rs 891.0. The current market price of Sobha is Rs 572.55.

Sobha, incorporated in the year 1995, is a Mid Cap company (having a market cap of Rs 5444.15 Crore) operating in Real Estate sector.

Sobha key Products/Revenue Segments include Income From Construction Work, Income From Financial Services, Land Development Rights, Income From Glazing, Income From Interiors, Concrete Blocks, Rental Income, Scrap for the year ending 31-Mar-2022.


Financials
For the quarter ended 31-03-2023, the company has reported a Consolidated Total Income of Rs 1240.10 Crore, up 38.10 % from last quarter Total Income of Rs 898.00 Crore and up 61.72 % from last year same quarter Total Income of Rs 766.80 Crore. Company has reported net profit after tax of Rs 48.60 Crore in latest quarter.

Investment Rationale
The strong start to FY24 comes on the back of a strong FY23 operating performance where the company had clocked its best-ever annual sales performance with gross sales bookings of 5.65msf worth Rs52.0bn. The company plans to launch 7-8msf of new projects in FY24, of which 5msf is expected to be in Bengaluru, 1msf in Gurugram and balance in other cities. If the approvals for all the planned launches come through, then the company is targeting 15-20% growth in gross sales bookings forFY24 (we model for sales bookings of Rs57.8bn in FY24E and Rs61.1bn in FY25E).

Another key positive in FY23 was the company’s net debt levels reducing by Rs7.0bn to Rs16.4bn (net D/E of 0.66x).

Promoter/FII Holdings
Promoters held 52.26 per cent stake in the company as of 31-Mar-2023, while FIIs owned 13.76 per cent, DIIs 13.62 per cent.