Shares of Sobha have gone up over 20% in just the past month. Domestic brokerage firms ICICI Securities and HDFC Securities expect the stock to go up another 50%.

The Sobha Analysts: The analyst team at HDFC Securities led by Parikshit D Kandpal maintained their ‘buy’ rating for the stock with a price target of ₹935 – an over 67% upside from the stock’s last closing price of ₹558.25.

Adhidev Chattopadhyay for ICICI Securities also maintained the ‘buy’ rating for the stock revising up the target price to ₹891 from ₹808.

The Sobha Thesis: Analysts at HDFC Securities noted that the company’s earnings for the March quarter beat its expectations on most counts. The company’s revenue of ₹1,209 crore beat its estimates by 42%. EBITDA came in at ₹115.6 crore, marking a 4% beat.

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ICICI Securities noted that the company achieved record Q4FY23 gross sales bookings of 1.48 million square feet worth ₹1,460 crore (up 32% year-on-year in value terms) aided by the company achieving its highest ever gross realisation of Rs 9,898/square foot.

The brokerage firm added that the company’s management is confident that demand continues to be resilient and the company plans to launch 7-8 million square feet of new projects in FY24, of which 5 million square feet is expected to be in Bengaluru, 1 million square feet in Gurugram and the rest in other cities.

However, HDFC pointed out that for FY24, the real estate company plans to utilise its robust cash flow more towards growth than net debt reduction. Taking the near-term pressure on margins into account the firm cut its estimates for the company’s profits in FY24 and FY25 by 23.8% and 10.9%.

Price Action: Sobha’s share price was up 2.19% to trade at ₹570.50 in the late hours of trading on Friday.

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