A realty stock has been on a downtrend this year so far, underperforming the sectoral index BSE Realty as well as the benchmark index Sensex. However, despite the poor performance, brokerage firm Emkay Global Financial Services remains positive about it, anticipating a nearly 60% upside potential in it.
The stock is Sobha – a major realty player in India, with a presence across 27 Indian cities.
Sobha share price trend
Sobha share price ended 1.51% down at ₹1,197 on the BSE on Monday, 5 October, extending losses for the second consecutive session.
As per BSE data, the stock is down 18% year-to-date (YTD) compared to a 4% fall in the BSE Realty index and a 15% drop in the benchmark Sensex in the same period.
Over the last six months, the stock has risen by 3%, compared to a nearly 26% jump in the BSE Realty index and a 1% drop in the Sensex.
Sobha shares hit a 52-week high of ₹1,730.90 on 10 November last year before hitting a 52-week low of ₹1,131.10 on 2 April this year.
Sobha Q2 business update
In an exchange filing on 2 October, Sobha recorded the second-highest-ever quarterly sales value of ₹2,206 crore, with 1.42 million square feet of area sold, comprising 828 units, in Q2FY27. Its share of sales value stood at ₹1,882 crore. Total sales value grew by 16% year-on-year (YoY).
It completed 720 homes totalling 1.49 million square feet of saleable area spread across 9 wings/blocks.
During the quarter, it launched 1.03 million square feet of saleable area covering two projects, one each in Calicut and Mysore.
On a half-yearly basis, the company achieved the highest-ever half-yearly sales value of ₹5,862 crore, with 3.76 million square feet of area sold across 2,260 units. Its share of sales value also reached a record high of ₹4,874 crore, driven by a strong response to new project launches in the first half of the financial year. Thus, its sales value jumped 47.2% YoY and sales area increased by 32.4% YoY.
Emkay remains positive
Emkay Global Financial Services has maintained a “buy” recommendation on the stock with a target price of ₹1,900, based on 8 times September-28E EV/embedded EBITDA, at 21% premium to NAV – the stock currently trades at a 23% discount to NAV.
The stock’s current target price from Emkay implies a 59% upside from the stock’s 5 October closing price of ₹1,197 on the BSE.
Emkay said Sobha’s strong sales momentum seen in FY26 continued into the first half of FY27 (H1FY27), aided by resilient demand in the Bengaluru real estate market. Although the company had limited launches in Q2, it witnessed strong sustenance sales in its Bengaluru projects.
“Sobha clocked pre-sales of ₹2,210 crore in Q2FY27 versus our estimate of ₹2,000 crore, resulting in ₹5,860 crore of pre-sales in H1FY27. With another ₹7,000- ₹9,000 crore GDV launches planned and estimated unsold inventory of ₹4,500 crore for H2FY27, we expect Sobha to easily surpass pre-sales of ₹11,000- ₹12,000 crore (35-45% YoY) in FY27E against its guidance of ₹10,600 crore,” said Emkay.
According to Emkay, Sobha’s margins may see an uptick from Q3 onward, with key projects such as Sobha Neopolis (own project) and Sobha Manhattan expected to commence delivery.
“Reported margins remain Sobha’s key pain point and hover in single digits. However, its ongoing projects have a higher mix of high-margin projects, including owned projects, with project-level EBITDA margins upward of 35%. These projects are expected to come up for recognition from H2FY27 onward, and thus, Sobha is expected to see a strong uptick in reported EBITDA margins from H2FY27 onward,” said Emkay.
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