Sobha: Sales momentum

The stock of Sobha rose nearly 12 per cent last week. This was mainly due to the good sales growth (volume and value) recorded by the company in the first quarter of FY-19. The company has a presence in all the verticals of the residential segment — luxury, super luxury and affordable housing properties.

With the real estate market slowly reviving and RERA (Real Estate Regulatory Authority) dust settling down, the company’s sales too are picking up, particularly in the affordable segment. The company has reported sales volume growth of 18 per cent year-on-year and sales value growth of 22 per cent year-on-year. While the company’s core operations in Bengaluru contribute nearly 64 per cent of the total sales volume, it has registered a single-digit growth of about 3.4 per cent year-on-year in this region. However, Mysuru, Kochi, Thrissur and Coimbatore reported strong growth, albeit on a smaller base, in the first quarter of FY-19. This is a continuation of the trend seen in the previous quarters of fiscal 2018.

The overall average price realisation (price per square feet) of the company has grown about 4 per cent year-on-year in Q1. If joint developments are excluded, the average price realisation has fallen about 8 per cent year-on-year during the June quarter. This could be attributed to the relatively lower pricing power in its own projects vis-a-vis joint developments. So far, the company has received RERA approvals for its projects in Mysuru and Bengaluru.

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