Buy Sobha, target price Rs 855: Motilal Oswal

Motilal Oswal has buy call on Sobha with a target price of Rs 855. The current market price of Sobha Ltd. is Rs 578.85.

Sobha Ltd., incorporated in the year 1995, is a Mid Cap company (having a market cap of Rs 5474.98 Crore) operating in Real Estate sector.

Sobha Ltd. 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 31-12-2022, the company reported a Consolidated Total Income of Rs 898.00 Crore, up 30.03 % from last quarter Total Income of Rs 690.60 Crore and up 28.75 % from last year same quarter Total Income of Rs 697.50 Crore. Company reported net profit after tax of Rs 31.80 Crore in latest quarter.


Investment Rationale
The current valuations imply a steep 50% discount to the book value of land, which is unwarranted. It arrives at a fair land value of INR41b (applying 20% discount to derived value) v/s INR15b of implied value.

Promoter/FII Holdings
Promoters held 51.99 per cent stake in the company as of 31-Dec-2022, while FIIs owned 15.06 per cent, DIIs 13.75 per cent.