2 days ago
Emkay Sees 59% Upside in Sobha After Strong Q2 Sales
Sobha is a company that builds homes in India.
Its shares have fallen this year, even though the company sold many homes.
In the second quarter of FY27, Sobha recorded sales worth ₹2,206 crore.
Its sales for the first half of the year were the highest it had ever reported for a half-year.
Emkay, a brokerage firm, thinks the company’s sales could keep growing.
Emkay expects Sobha to launch more projects and sell homes already available.
It also expects the company’s profit margins to improve later in the financial year.
Emkay kept its buy recommendation and set a target price of ₹1,900 per share.
Sobha shares closed at ₹1,197 on 5 October, down 18% year to date, underperforming the BSE Realty index and Sensex.
Sobha reported Q2FY27 sales value of ₹2,206 crore, up 16% year on year, with 1.42 million square feet sold.
For the first half of FY27, sales value reached a record ₹5,862 crore, up 47.2% year on year.
Emkay maintained its buy rating and ₹1,900 target price, implying about 59% upside from the 5 October close.
Emkay expects planned launches and inventory sales to support FY27 presales, and forecast margins to improve from H2FY27.
- Who
- Sobha; Emkay Global Financial Services
- What
- Sobha reported Q2FY27 business results, and Emkay maintained a buy rating with a ₹1,900 target price.
- Where
- Sobha operates across 27 Indian cities; its shares are traded on the BSE.
- When
- The Q2FY27 update was filed on 2 October; the share price cited is the 5 October close.
- Why
- Emkay cited continuing sales momentum, resilient Bengaluru demand, planned launches and expected margin improvement.
Emkay's positive outlook
Performance and margin concerns
Share performance
Emkay's positive outlook
Emkay maintained a buy recommendation and sees about 59% upside to its ₹1,900 target.
Performance and margin concerns
Sobha shares were down 18% year to date and had underperformed both the BSE Realty index and Sensex.
Growth and profitability
Emkay's positive outlook
Emkay said sales momentum continued, projected FY27 presales above ₹11,000–₹12,000 crore, and expects margins to rise from H2FY27.
Performance and margin concerns
Emkay noted that reported margins remain a key weakness and are in the single digits.
Key facts
- 5 October closing price
- ₹1,197, down 1.51% on the day
- Year-to-date share performance
- Down 18%; the BSE Realty index was down 4% and Sensex down 15% over the same period
- Q2FY27 sales value
- ₹2,206 crore, the second-highest quarterly sales value; up 16% year on year
- Q2FY27 homes sold
- 828 units covering 1.42 million square feet
- H1FY27 sales value
- Record ₹5,862 crore, up 47.2% year on year
- Emkay recommendation and target
- Buy; ₹1,900 per share, implying approximately 59% upside from the 5 October close
- Planned launches
- Emkay cited ₹7,000–₹9,000 crore in gross development value launches planned
Quotes
Emkay Global Financial Services
Brokerage firm providing research and a recommendation on Sobha.
“Reported margins remain Sobha’s key pain point and hover in single digits. However, its ongoing projects have a higher mix of high-margin projects, including owned projects, with project-level EBITDA margins upward of 35%. These projects are expected to come up for recognition from H2FY27 onward, and thus, Sobha is expected to see a strong uptick in reported EBITDA margins from H2FY27 onward.”
livemint.com
“Sobha clocked pre-sales of ₹2,210 crore in Q2FY27 versus our estimate of ₹2,000 crore, resulting in ₹5,860 crore of pre-sales in H1FY27. With another ₹7,000- ₹9,000 crore GDV launches planned and estimated unsold inventory of ₹4,500 crore for H2FY27, we expect Sobha to easily surpass pre-sales of ₹11,000- ₹12,000 crore (35-45% YoY) in FY27E against its guidance of ₹10,600 crore.”
livemint.com
Sources
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