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SOBHA released its 3QFY23 business update. Following are the key takeaways:

* Sobha Ltd. reported the highest-ever quarterly bookings of INR14.2b, up 36% YoY and 14% higher than our estimate of INR12.5b. For 9MFY23, bookings stood at INR37.3b, up 35% YoY.

* The strong pre-sales were driven by sustained momentum in ongoing projects and a strong response to its new towers launched at Sobha City (Gurgaon) in 3Q. Sales volume from Bengaluru declined marginally to 0.9msf (v/s 1msf+ over last few quarters) and its share in overall volume declined to 60% (from ~74% TTM average) due to a higher contribution from the NCR.

* In terms of volume too, pre-sales were the highest ever at 1.5msf, up 12%/10% YoY/QoQ. Sobha’s realization for the quarter increased 22% YoY to INR9,650/sft. The company’s share of value increased 22% YoY to a record INR11.1b.

* Sobha also highlighted that cash flows remained healthy during the quarter, resulting in further debt reduction. Its contractual and manufacturing division witnessed increased demand from institutional clients.

* In FY22, Sobha achieved pre-sales of 4.9msf and targets to achieve 10-15% volume growth and 15-20% value growth in bookings in FY23.

Valuation and view: We would revisit our estimates post its 3QFY23 earnings. We have a Buy rating on the stock.

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