Record sales drive shares of Sobha higher

Bavadharini KS BL Research Bureau | Updated on April 06, 2018 Published on April 06, 2018

Shares of Sobha rose nearly 8 per cent after the Bengaluru-based real estate developer registered good sales numbers for the quarter ended March 2018. For this period, the company reported volume and value growth of 40 per cent and 30 per cent year-on-year, respectively.

The company mainly operates in residential segments with presence in luxury, super luxury and affordable housing properties. It has also branched out into commercial space and offers contractual services such as civil, electrical, interiors, plumbing and landscaping to its customers.

The company’s core operation in Bengaluru has recorded solid volume growth of 48 per cent in the March quarter. This is followed by Kochi, Thrissur and Coimbatore regions, which have recorded high growth, albeit on a smaller base. This is a continuation of the trend seen in the previous quarters of fiscal 2018.

The company registered good sales volume and value growth in Q3, increasing 52 and 64 per cent y-o-y, respectively. Although sales volume in the September and June quarters remained subdued, sales value grew in the range of 22-21 per cent y-o-y. This could be on account of the sale of unsold inventories with the company. Overall, the company has ended fiscal 2018 on a high note. Sales volume and value growth for the full year 2017-18 increased 21 and 42 per cent, respectively, compared to the previous year.

On the average price realisation front, total average price realisation (price per square feet), the company has shown growth of about 4 per cent y-o-y in Q4. On the other hand, Shoba’s share (ie, excluding joint development) of average price realisation has fallen about 8 per cent y-o-y in the recent quarter. This could be attributed to relatively lower pricing power in its own projects vis-a-vis joint developments. However, in Q3, the average price realisation (Sobha’s share) grew 7.5 per cent y-o-y indicating the decline in the recent quarter could be a one-off event. Total average price realisation for the company stood at about 18 per cent for 2017-18.

As for the financial performance of the company, revenue and profit grew about 23 and 49 per cent y-o-y for the nine months ending December 2017, thanks to recovery in real estate markets in regions such as Bengaluru.

Going ahead, the firm expects further pick-up in the residential market and is planning on launching new projects.

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