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Miss on financial performance; strong launch pipeline provides visibility

Operational performance

*/ Sobha reported bookings of INR18.4b (8% above estimate) and up 22%/32% YoY/QoQ. Sobha's share of sales stood at INR13.7b, up 8%/10% YoY/QoQ. Sobha's share in total bookings was at 75%. In FY25, it reported bookings at INR63b, down 6% YoY (in line with the estimate). Sobha’s share of sales stood at INR50b, down 8% YoY.

* In 4QFY25, ~76% of its sales were led by Bangalore. It recorded INR14b of sales across 1.24msf, supported by two new launches, SOBHA Madison Heights and SOBHA Hamptons, with a total saleable area of 3.7msf. Sales in Hyderabad and Tamil Nadu were up ~2x/54% YoY to INR418m/INR371m. Gurgaon posted 25% QoQ growth in sales, whereas Kerala remained steady.

* Total sales volume for the quarter stood at ~1.6msf, up 16%/+53% YoY/QoQ. However, realization was up 5% YoY to INR11,781. In FY25, total sales volume stood at ~4.7msf, down 23% YoY. Realization was up 23% YoY to INR13,399 due to an increase in prices of ongoing projects and higher realization from new launches.

* The company's project pipeline has increased to ~31msf (vs. 24msf in 4QFY24), including 19msf of new projects with ~8msf in Bengaluru.

* Collections increased 99%/101% YoY/QoQ to INR26.5b. Total cash inflow (incl. contractual business) stood at INR17.9b, up 19% YoY.

* Operating cash flows (before interest and taxes) rose 29% YoY to INR4.6b.

* In line with its growth-focused strategy, SOBHA increased land-related investments for the quarter to ~INR3.1b, up 49% YoY. During the quarter, the company generated a cash surplus of INR10.9b.

* Net cash position stood at INR6.3b (vs. net debt of INR4.59b or 0.13x in 3QFY25). Cost of borrowings reduced to 9.12% (from 9.44% in 3QFY25).

* SOBHA delivered 4.54msf in FY25, translating into 3,008 apartments, while for the quarter, the company delivered 1.11msf.

Financial performance

* In 4QFY25, its revenue was up 63% YoY/flat QoQ at INR12.4b (11% below our est.). Real Estate revenue was up 74% YoY/flat QoQ at INR34b.

* EBITDA was up 52%/40% YoY/QoQ to INR0.9b (in line with estimate) with a margin of 7.6%, down 56bps YoY and up 209bps QoQ. The margin in the real estate business was at 8%.

* Adj. PAT stood at INR409m, 6x/88% YoY/QoQ (36% below estimate). Its PAT margin was 3.3%, up 237bp/152bp YoY/QoQ.

* In FY25, revenue increased 30% YoY to INR40b, which was in line with our estimate. Real estate revenue was up 40% YoY to INR34b.

* EBITDA was up 6% YoY to INR2.9b (in line with the estimate) with a margin of 7.3%, up 29bp YoY. The margin in the real estate business was 10%.

* For FY25, Adj. PAT stood at INR947m, up 93% YoY. The PAT margin came in at 2.3%, up 76bp YoY.

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