Sobha: Weak quarter, muted pending outlook

Posted January 19, 2015 by Nikhilmishra

Regardless of predictable commencement of high volume venture, it is improbable to convene FY15 conjecture on sales

The December quarter has been a unsatisfactory one for real estate player Sobha, tracing its weakest sales for a quarter in three years. It reported latest sales of 0.66 million sq ft, down 11 per cent above an year, and 21 per cent on a sequential basis.

The corporation had an twelve-monthly sales objective of four million sq ft, with sales worth of Rs 2,700 crore and has accomplished 2.3 million sq ft, with sales worth of Rs 1,470 crore for the nine months defunct December. Given that it has merely attained 57 per cent and 54 per cent of its amount and value prospects, correspondingly, it is improbable to convene its estimate for this monetary year. It has preserved a watchful memorandum on forecast, as demand prolongs to be subdued. With anticipation of feeble sales and a subdued temporary point of view, the stock has been trending down and above the month is down 12 per cent.

December quarter’s sales knocked down because of inferior stipulation, superior rates and slower rapidity of supports. Bengaluru prolongs to be the key volume driver, enticing 79 per cent of sales. Lethargic endorsements in Tamil Nadu and Kerala postponed venture initiates. Throughout the quarter, it pre-commenced two ventures — Sobha Halcyon situated at Whitefield, Bengaluru and Sobha Elanza at Kothrud, Pune.

The standard worth comprehension was down to five per cent over a year to Rs 6,456 per sq ft because of minor sales from the Gurgaon marketplace, where the ticket mass is over Rs 3 crore. The corporation traced its lowest ever sales in this market in the quarter. Given dawdling claim for opulence ventures, there is improbable to be much traction in the close to intermediate term.

Analysts anticipate volumes to lift up, given its strategies to commence lower unit cost venture Aspirational Homes in Bengaluru in the March quarter.

The corporation imagines the venture to go ahead to a considerable development in fresh sales. Given the expected cost of below Rs 50 lakh for each unit, volumes are about to recover however market analysts consider the spurt from sales of this venture will still not be capable of helping the business convene its FY15 objective.

Debt levels are projected to have augmented in the December quarter, given the lower cash flows, although should go down because of earnings from select land monetization, considers Samar Sarda of Kotak Securities. Regardless of pending apprehensions, most analysts prolong to have an optimistic stance on the stock.
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Last Updated January 19, 2015