On its plotted course
Sobha Developers Ltd (Sobha) declared revenues of Rs 2.7 billion (up 30% YoY), EBITDA of Rs 0.7 billion (up 90% YoY) and PAT of Rs 0.4 billion (up 141% YoY) for Q1FY08. Income from real estate (own development) was Rs 1.5 billion (up 48% YoY), while the company's contractual business resulted in revenues of Rs 0.9 billion (up 25% YoY). Operating margins for the company stood at 25% as against 17% in Q1F07 due to a higher contribution from its real estate business. Sobha's land reserves now stand at a total of 3,574 acres with an average land cost of Rs 142/ psf.
Q1FY07 Highlights:
During the quarter, 13 projects (incl. 2 projects of 0.36 million sq. ft. that crossed the 25% threshold this quarter) contributed to revenues. Further, Sobha also received approvals for 3 residential projects totaling 0.6 million sq. ft., which will be launched shortly.
Sobha currently has 10 projects (3.86mn sq. ft.) under construction, which shall cross the 25% threshold in FY08E.
During the quarter, Sobha also launched Phase I of its 1st integrated township in Thrissur, Kerala totaling 3.5 million sq. ft. (57 acres) with an estimated investment of Rs 8.5 billion.
Sobha currently has 34 ongoing contractual projects (of which 26 are for Infosys) totaling 8.69 million sq. ft. with a realizable value of Rs 8.2 billion; and has plans for an additional 16 projects (3.17 million) with an estimated realizable value of Rs 2.2 billion.
The company has also forayed into the home furnishing segment under the brand name "Sobha Lifestyle", targeting a turnover of Rs 5 billion in 5 years.
Outlook
The real estate sector is fraught with lumpiness due to the percentage completion methodology adopted and hence quarterly results are not reflective of the full year revenues. Sobha intends to deliver and hand over 7 projects totaling 2 million sq. ft. by FY08. With 16 million sq. ft. (11 million real estate and 5 million contractual) under construction, we believe the company is on track to achieve our EPS of Rs 34.5 for FY08E. At CMP of Rs 797, the stock trades at a 15% discount to our NAV of Rs 935. We upgrade our rating to a sector Outperformer, while maintaining our sum-of-parts price target at Rs 907.
Sobha Developers Ltd (Sobha) declared revenues of Rs 2.7 billion (up 30% YoY), EBITDA of Rs 0.7 billion (up 90% YoY) and PAT of Rs 0.4 billion (up 141% YoY) for Q1FY08. Income from real estate (own development) was Rs 1.5 billion (up 48% YoY), while the company's contractual business resulted in revenues of Rs 0.9 billion (up 25% YoY). Operating margins for the company stood at 25% as against 17% in Q1F07 due to a higher contribution from its real estate business. Sobha's land reserves now stand at a total of 3,574 acres with an average land cost of Rs 142/ psf.
Q1FY07 Highlights:
During the quarter, 13 projects (incl. 2 projects of 0.36 million sq. ft. that crossed the 25% threshold this quarter) contributed to revenues. Further, Sobha also received approvals for 3 residential projects totaling 0.6 million sq. ft., which will be launched shortly.
Sobha currently has 10 projects (3.86mn sq. ft.) under construction, which shall cross the 25% threshold in FY08E.
During the quarter, Sobha also launched Phase I of its 1st integrated township in Thrissur, Kerala totaling 3.5 million sq. ft. (57 acres) with an estimated investment of Rs 8.5 billion.
Sobha currently has 34 ongoing contractual projects (of which 26 are for Infosys) totaling 8.69 million sq. ft. with a realizable value of Rs 8.2 billion; and has plans for an additional 16 projects (3.17 million) with an estimated realizable value of Rs 2.2 billion.
The company has also forayed into the home furnishing segment under the brand name "Sobha Lifestyle", targeting a turnover of Rs 5 billion in 5 years.
Outlook
The real estate sector is fraught with lumpiness due to the percentage completion methodology adopted and hence quarterly results are not reflective of the full year revenues. Sobha intends to deliver and hand over 7 projects totaling 2 million sq. ft. by FY08. With 16 million sq. ft. (11 million real estate and 5 million contractual) under construction, we believe the company is on track to achieve our EPS of Rs 34.5 for FY08E. At CMP of Rs 797, the stock trades at a 15% discount to our NAV of Rs 935. We upgrade our rating to a sector Outperformer, while maintaining our sum-of-parts price target at Rs 907.
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