Company Update : Sobha Ltd By Motilal Oswal Financial Services Ltd
Lesser launches drag pre-sales; a strong launch pipeline provides visibility
Operational performance
* SOBHA reported bookings of INR14b (37% below estimate) and -29%/+18% YoY/QoQ. SOBHA’s share of sales stood at INR12.5b, -28%/+27% YoY/QoQ. However, its share in total bookings rose to 90% due to high contributions from its 'own' projects of Sobha Neopolis and Sobha Ayana in Bangalore.
* In 3QFY25, the sales were mostly driven by Bangalore projects, which were 72% of the company's total bookings. The newly launched luxury project - 'Sobha Ayana' - in Bangalore contributed to ~50% of Bangalore sales. In 9M, the company launched six new projects with a total area of ~4.7msf.
* Total sales volume for the quarter stood at ~1.02msf, -39%/+9% YoY/QoQ. However, realization was up 16%/8% YoY/QoQ to INR13,663. In 9MFY25, total sales volume stood at ~3.1msf, down 34% YoY. Realization was up 31% YoY due to INR14,226 due to an increase in the prices of ongoing projects and higher realization from the new launches.
* The company's project pipeline has increased to ~30msf (v/s 24msf in 4QFY24) including 22msf of new projects with ~11msf in Bengaluru.
* Collections increased 2%/3% YoY/QoQ to INR13.2b. Total cash inflows (incl. contractual business) stood at INR14.8b, down 1% YoY. ? Operating cash flows (before interest and taxes) dipped 23% YoY to INR2b.
* In line with the growth-focused strategy, SOBHA increased land-related investments for the quarter to ~INR3.1b, up 5x YoY. During the quarter, the company generated cash of INR1.8b.
* Net debt stood at INR4.59b or 0.13x of equity (vs. INR2.8b or 0.08x in 2QFY25). The cost of borrowing increased to 9.44% (from 9.4% in 2QFY25).
* SOBHA has an unsold 8.9msf of inventory across completed and ongoing projects, while it has 19.29msf of potential saleable area in the upcoming projects
Financial performance
* In 3QFY25, revenue increased 79%/31% YoY/QoQ to INR12.2b (4% above estimate). The real estate revenue rose 104%/36% YoY/QoQ to INR10.6b.
* EBITDA declined 9%/13% YoY/QoQ to INR0.7b (62% below estimate) with a margin of 5.5%, down 533bp/277bp YoY/QoQ. The margin in the real estate business was 12%, -838bp/+101bp YoY/QoQ.
* Adj. PAT stood at INR217m, +44%/-17% YoY/QoQ (76% below estimate). Pat margin was at 1.8%, down 43bp/102bp YoY/QoQ.
* During 9MFY25, revenue increased 20% YoY to INR28b. Real Estate’s revenue was up 28% YoY to INR23b.
* EBITDA declined 7% YoY to INR2b with a margin of 7%, down 205bp YoY. The margin in the real estate business was 12%, down 676bp YoY.
* For 9MFY25, Adj. PAT stood at INR538m, up 28% YoY. Pat margin was at 1.9%, up 12bp YoY.
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