Sobha Developers, 2Q performance boosted by land sale:: IIFL,

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2Q performance boosted by land sale
• Sobha’s 35% QoQ growth in revenues and 70% QoQ growth in
profit was driven primarily by sale of 50 acres of land in Pune
during the quarter. Revenues from the real estate and contractual
businesses were flat QoQ.
• Sales volumes grew 11% QoQ to 0.74m sq ft, driven primarily by
growth in Bangalore volumes.
• Sequential growth in Bangalore volumes in a traditionally weak
quarter highlights strong tailwinds for demand from the IT/ITeS
sector and augurs well for Sobha as it approaches the festive
season, which is usually a good time for real estate sales.
• Sobha reduced gross debt levels by cRs1.7bn during the quarter
from operating cashflows (net D/E = 0.7x). It intends to bring net
D/E to 0.5x by end-FY11.
• The company has lined up launches aggregating 6.5m sq ft in
existing cities (5m sq ft in Bangalore) and would look to launch
the first phase of its 6m sq ft NCR project by end-FY11.
• Trading at a 15% discount to our NAV of Rs427/share, Sobha is
well poised to benefit from the strength in the Bangalore market.
• 2QFY11 performance boosted by land sales: Sobha reported
revenues from real estate and construction businesses flat QoQ. The
company sold 50 acres of land in Pune during the quarter for
Rs1.14bn, which drove QoQ growth in revenue and PAT.