Sobha Developers Zoomed 9% Today. Here's Why...

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Sobha Developers Zoomed 9% Today. Here's Why...

Jul 7, 2021

Shares of real estate company Sobha Developers soared 9% on NSE in early trade today after the company provided an update on its operations for the June 2021 quarter.

The south-India based real estate company clocked a decent performance in the June quarter of the current fiscal, despite the lockdown.

The company achieved a total sales volume of 895,539 square feet of super built-up area valued at Rs 6.8 bn.

It had sold 650,400 square feet of super built-up area worth Rs 4.8 bn in the same period last year.

Covid has changed certain things for the company. There have been some positive disruptions, especially for the services sector.

Large number of people are getting used for concepts like - work from home, work near home, digitally enabled spaces, and larger living spaces.

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Suddenly we have seen our lives centred around our own living spaces. This new reset is going to stay for long.

On this Sobha Developers mentioned,

  • The role of organized players in the real estate sector will become more significant.

    Those who have been delivering high quality homes, in time and with transparency will become more important.

Sales figures that drove the share price

The total sales volume of the company during the June 2021 quarter jumped by 37%.

The company carries out its operations in 10 cities of southern India. Its sales volume increased in 5 out of those 10 cities during the quarter.

In Bengaluru, the sales volume grew by 37% year on year (YoY) despite the stringent impact of the second Covid-19 wave.

Cities such as Gurugram, Kochi, Thrissur, Pune, and GIFT City also had higher sales volume during the quarter.

However, other southern cities like Chennai, Coimbatore, and Kozhikode underperformed during the period under review. The company made zero sales in Mysore.

Sequentially, its volume and value sales growth declined 33% and 35%, respectively.

However, on a YoY basis, sales growth on both these parameters improved due to a favourable base effect.

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The total average price realization per square feet increased by 2% to Rs 7,626 in the June 2021 quarter from Rs 7,498 in the June 2020 quarter.

The company's average per square feet realisation in the financial year 2021 was Rs 7,817.

If we compare between regions, Bengaluru continued to be a key market for the company, contributing 74% of the total volume.

Sobha Sales Volumes in Square Feet (June 2021 vs June 2020)
Location Jun-21 Jun-20
Bengaluru 663,867 484,278
Gurugram 67,336 30,754
Kochi 52,833 39,622
Mysore - 17,903
Chennai 14,064 21,049
Coimbatore 4,402 11,335
Thrissur 40,152 20,630
Kozhikode 2,019 6,960
Pune 24,993 9,440
GIFT City 25,873 8,438
Total 895,539 650,400
Data Source: Company

Confident of performance amid the second wave

The revival in housing demand and Sobha Developers' focus on cash flows and geographical expansion is expected to hold the company in good stead going forward.

In its latest quarterly update, the company said,

  • Economic activities have started opening, and it is expected that normalcy will return in the second half of the financial year 2022.

    However, we cannot completely rule out uncertainties and the likely impact caused by the second wave of the pandemic.

    We are also unsure about how and when the third wave will strike and with what consequences. However, we have planned new launches of 13.4 m square feet, and we intend to take it ahead.

    We believe Sobha is strong enough to withstand any impact with resilience and is confident to keep improving its market share in the residential space.

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How the market reacted to Sobha Developers quarterly update

Sobha Developers share price opened at Rs 512.6 on the NSE against a previous close of Rs 490.9. On the BSE it opened at Rs 514.9.

At the time of writing, the scrip was trading up by 4.3% at Rs 512, with the broader S&P BSE REALTY Index trading up by 1.9%.

Within the real estate/construction sector, the top gainers today are Sobha Developers (up 4.3%) and Godrej Properties (up 3.2%).

About Sobha Developers

Sobha Developers is an Indian multinational real estate developer headquartered in Bangalore, India.

It was founded in 1995 by PNC Menon.

The company has executed projects for some of India's corporate houses, including Infosys, WIPRO, HCL, Bosch, Biocon, Dell, Taj Group of Hotels, and ITC Hotels.

It has achieved growth with backward integration in the construction and real estate development business in India.

Their long-term performance has been supported by the in-house production of construction items and furniture.

The company has a geographic presence in 27 cities in 14 states of India.

Internationally, Sobha Developers has operations running in Oman and Dubai as Sobha Realty.

To know more about the company checkout Sobha Developers fact sheet and Sobha Developers quarterly result on our website.

You can also compare Sobha Developers with its peers.

Sobha Developers vs MARG

Sobha Developers vs DLF

Sobha Developers vs Godrej Properties

Sobha Developers vs Ahluwalia Contracts

Sobha Developers vs Godrej Properties

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...

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