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Sobha ----------------------------------------------------------------------------
Maintain OUTPERFORM
3Q11: Steady progress in bookings, margins improve
● Sobha reported 3Q11 PAT of Rs491 mn, up 20% YoY and down
17% QoQ. Adjusting for land sales (Rs340 mn in 3Q11), total
revenue rose 4% QoQ and real estate revenue rose 6% QoQ.
Adjusted EBITDA margin stood at 24.6%, up 460 bp QoQ.
● Sobha sold 0.71 mn sq ft in 3Q11 and appears on course to
achieve 3 mn sq ft of target for FY11. 2.11 mn sq ft was delivered
and 2.5 mn sq ft was launched in 3Q11. 11.3 mn sq ft is planned
to be launched across seven cities over the next few quarters.
● Post- tax and-interest operating cash flows were negative Rs345
mn in 3Q11, as the company spent about Rs400 mn in
preparation for new launches. Net debt:equity stood at 0.67x as of
Dec-10 and is expected to fall to 0.5-0.6x by Mar-11. Management
expects to achieve net Rs12.2 bn of positive cash flows from its
ongoing and completed projects over the next 18-24 months.
● We revise our model and expect higher revenue recognition for
4Q11. As a result, our FY11E and FY12E EPS increase 4.8% and
0.1%, respectively. We maintain an OUTPERFORM.
Sobha reported 3Q11 PAT of Rs491 mn, up 20% YoY and down 17%
QoQ. Adjusting for land sales (Rs340 mn in 3Q11 due to one land
parcel in Chennai and two in Bangalore, and Rs1.1 bn in 2Q11), total
revenue rose 4% QoQ and real estate revenue rose 6% QoQ.
Adjusted EBITDA margin stood at 24.6% compared to 20% in 2Q11.
Steady progress in bookings, slew of launches planned
Sobha sold 0.71 mn sq ft (Bangalore contributed 80%) and launched
2.5 mn sq ft of premium housing projects in Bangalore, Thrissur and
Pune in 3Q11. 2.11 mn sq ft was delivered and another 2 mn sq ft is
expected to be delivered in 4Q11. Management is confident about
achieving 0.9 mn sq ft of bookings in 4Q11 required to achieve 3 mn
sq ft FY11 target through 0.6-0.7 mn sq ft sales in existing locations
and the rest from launches in new cities (Chennai, Gurgaon and
Mysore). 11.3 mn sq ft is planned to be launched over the next few
quarters. On the contractual side, Sobha has 6.53 mn sq ft of ongoing
orders and another 6.9 mn sq ft of committed orders. Sobha delivered
0.43 mn sq ft in 3Q11 and expects to deliver another 1.3 mn sq ft in
4Q11.
Post- tax and-interest operating cash flows were negative Rs345 mn
in 3Q11 and gross debt fell marginally (by Rs10 mn), as the company
spent about Rs400 mn in preparation for new launches. Management
expects to achieve Rs5.5 bn of debt repayment requirements by Mar-
12 through operating cash flows and the rest through refinancing. Net
debt:equity stood at 0.67x as of Dec-10 and is expected to fall to 0.5-
0.6x by Mar-11. On further land monetisation, management expects to
achieve Rs2 bn target for FY11, but intends to focus on execution
rather than land sales thereon.
Raise EPS estimates, maintain OUTPERFORM
On the back of expectations of higher revenue recognition ahead and
a slight improvement in margins, we raise our FY11E and FY12E EPS
by 4.8% and 0.1%, respectively. Our Mar-12 NAV stands at
Rs609/share and we maintain an OUTPERFORM on the stock.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Sobha ----------------------------------------------------------------------------
Maintain OUTPERFORM
3Q11: Steady progress in bookings, margins improve
● Sobha reported 3Q11 PAT of Rs491 mn, up 20% YoY and down
17% QoQ. Adjusting for land sales (Rs340 mn in 3Q11), total
revenue rose 4% QoQ and real estate revenue rose 6% QoQ.
Adjusted EBITDA margin stood at 24.6%, up 460 bp QoQ.
● Sobha sold 0.71 mn sq ft in 3Q11 and appears on course to
achieve 3 mn sq ft of target for FY11. 2.11 mn sq ft was delivered
and 2.5 mn sq ft was launched in 3Q11. 11.3 mn sq ft is planned
to be launched across seven cities over the next few quarters.
● Post- tax and-interest operating cash flows were negative Rs345
mn in 3Q11, as the company spent about Rs400 mn in
preparation for new launches. Net debt:equity stood at 0.67x as of
Dec-10 and is expected to fall to 0.5-0.6x by Mar-11. Management
expects to achieve net Rs12.2 bn of positive cash flows from its
ongoing and completed projects over the next 18-24 months.
● We revise our model and expect higher revenue recognition for
4Q11. As a result, our FY11E and FY12E EPS increase 4.8% and
0.1%, respectively. We maintain an OUTPERFORM.
Sobha reported 3Q11 PAT of Rs491 mn, up 20% YoY and down 17%
QoQ. Adjusting for land sales (Rs340 mn in 3Q11 due to one land
parcel in Chennai and two in Bangalore, and Rs1.1 bn in 2Q11), total
revenue rose 4% QoQ and real estate revenue rose 6% QoQ.
Adjusted EBITDA margin stood at 24.6% compared to 20% in 2Q11.
Steady progress in bookings, slew of launches planned
Sobha sold 0.71 mn sq ft (Bangalore contributed 80%) and launched
2.5 mn sq ft of premium housing projects in Bangalore, Thrissur and
Pune in 3Q11. 2.11 mn sq ft was delivered and another 2 mn sq ft is
expected to be delivered in 4Q11. Management is confident about
achieving 0.9 mn sq ft of bookings in 4Q11 required to achieve 3 mn
sq ft FY11 target through 0.6-0.7 mn sq ft sales in existing locations
and the rest from launches in new cities (Chennai, Gurgaon and
Mysore). 11.3 mn sq ft is planned to be launched over the next few
quarters. On the contractual side, Sobha has 6.53 mn sq ft of ongoing
orders and another 6.9 mn sq ft of committed orders. Sobha delivered
0.43 mn sq ft in 3Q11 and expects to deliver another 1.3 mn sq ft in
4Q11.
Post- tax and-interest operating cash flows were negative Rs345 mn
in 3Q11 and gross debt fell marginally (by Rs10 mn), as the company
spent about Rs400 mn in preparation for new launches. Management
expects to achieve Rs5.5 bn of debt repayment requirements by Mar-
12 through operating cash flows and the rest through refinancing. Net
debt:equity stood at 0.67x as of Dec-10 and is expected to fall to 0.5-
0.6x by Mar-11. On further land monetisation, management expects to
achieve Rs2 bn target for FY11, but intends to focus on execution
rather than land sales thereon.
Raise EPS estimates, maintain OUTPERFORM
On the back of expectations of higher revenue recognition ahead and
a slight improvement in margins, we raise our FY11E and FY12E EPS
by 4.8% and 0.1%, respectively. Our Mar-12 NAV stands at
Rs609/share and we maintain an OUTPERFORM on the stock.
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