Bengaluru industry drives uptick in sales bookings.
Sobha’s Q3FY21 gross sales volumes of 1.13msf worth Rs 8.9bn wereup 6% y-o-y in volume terms and 22% y-o-y in worth terms. A robust q-o-q uptick in Bengaluru and continued momentum in Kochi/Gurugram markets has enabled Sobha to cross pre-Covid sales bookings inspite of minimal launches. The organization maintains its guidance of reaching a y-o-y development in H2FY21 sales bookings on the back of new launches and monetisation of current inventory. We have raised our FY21/22E volume estimates by 25% to 3.9/4.7msf respectively (earlier 3.2/3.8msf) to reflect the enhanced functionality. We retain our ‘buy’ rating with a revised SOTP primarily based target price tag of Rs 505/share (earlier Rs 382) as we roll forward to Mar-22 NAV and construct in greater sales volumes more than FY21-23E. Ability to maintain debt levels in verify remains the essential monitorable.
Bengaluru industry drives uptick in sales bookings. On q-o-q basis, Sobha’s gross sales volumes and worth had been up 27% and 29%, respectively driven by a robust uptick in Bengaluru exactly where volumes surged 46% q-o-q to .79msf & contributed to 69% of the sales volumes. Sales trajectory in premium projects in Kochi and Gurugram remained robust as nicely. The sales volumes had been accomplished inspite of minimal new launches (one particular project of .12msf was launched in Bengaluru throughout the quarter).
Expect enhanced displaying in Q4FY21. The organization has accomplished 9MFY21 sales volumes of 2.7msf and remains confident of an enhanced displaying in Q4FY21 as nicely on the back of new launches and monetisation of current inventory. Hence, we think that the organization remains on track to clock a y-o-y sales booking development in H2FY21. We think that the fairly muted effect of Covid-19 on the IT/ITeS sector in South India in 9MFY21 has helped to a significant extent along with enhanced sales via digital channels.
While the organization remains optimistic about its upcoming launch pipeline of 14.5msf, the timing and region launched for sale remains dependent on the Covid-19 containment and pace of project approvals, specifically in South India. Debt levels stay essential. In Q2FY21, Sobha generated positive operating surplus of Rs 1.3bn, which was negated by interest/tax/capex and dividend payment of Rs 1.5bn top to net debt increasing by Rs .2bn q-o-q to Rs 30.5bn (net D/E of 1.3x).