Sobha Developers: Operations update: a wake-up call :: Kotak Securities

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Operations update: a wake-up call. Sobha’s 3QFY15 sales of 0.66 mn sq. ft, the
lowest since 4QFY11. We believe the low sales were due to high product prices—85%
of the products were priced above `10 mn/unit. Debt may rise marginally versus our
assumptions of a drop during the quarter. A timely launch of Aspirational Homes in
4Q15 may boost volumes in Bangalore, but still will fall short of Sobha’s FY2015
guidance. We maintain our ADD rating and March 2016E target of `540.

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Bengaluru remains the saving grace-- Sobha Developers ::HDFC Securities

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Sobha Developers: Timely change in product mix expected to boost volume growth:: Kotak Sec, report link

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Timely change in product mix expected to boost volume growth. Sobha achieved
about 45% of KIE estimates (lower than its guidance) for FY2015 with 3QFY15E
expected to see flat sales of super-luxury projects. The launch of high-volume units in
4QFY15 may boost Sobha’s volumes in 2015. We expect 2HFY15 debt to fall marginally
on lower land payments. We maintain ADD with a March 2016E target price of `540

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Sobha Developers - Valuation hinges on sales volume revival… :: ICICI Securities, PDF link

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Sobha Developers - Aspirational Homes to Boost Volumes; Result Update Q2FY15 :: Edelweiss, PDF link

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Sobha Developers: Buy : Business Line

Sobha Developers: Hold :: Business Line

Bangalore momentum continues to be robust, positive for Sobha :: Goldman Sachs

Property visits re-affirm our positive view
We recently visited property exhibition in Bangalore. Key takeaways: (1)
Sarjapur Road, Hebbal and Electronic City attracted the most attention with
the most number of projects. Sarjapur Road is a residential area and relatively
close to offices, with prices around Rs3,500-Rs5,000/sqft (possession between 1-
2 years). Prices around Hebbal are about Rs4,000+/sqft and it’s a preferred area
due to proximity to tech-parks and the airport. Prices in Electronic City have seen
some pick up after remaining soft due to slower development in the local
infrastructure; (2) Price increase: Projects launched over last 9-12 months have
seen price increases of 10%-25%; (3) Robust demand with 25%-35% of
properties up for possession in the next 24-36 months already being booked,
while about 80%-90% of properties likely to be completed in the next 6-12
months have been sold; (4) Residential rent growing at about 8%-15% yoy,
with yields of 3%-3.5%.
Office absorption data points to strong latent demand
Based on commercial absorption, we estimate steady state residential
demand of about 80mn sqft assuming 100 sqft per employee and a 1.5
worker per household. In addition to this, there is likely to be incremental
demand from retailers, self-employed professionals, government
employees, etc. Against this demand, recent absorption has been around
60 mn sqft indicating latent demand.
Better affordability with strong demand likely to drive prices higher
On our estimates, Bangalore affordability is 15% better than the last 10-
year average. We expect similar affordability levels in spite of recent price
increases on the back of lower interest rates and increase in income.
According to PropEquity, the 3-month average transaction price in
Bangalore for March, 2013 was at Rs4,025/sqft, up 16% yoy.
Fine-tune estimates for Sobha and Prestige for latest prices
Based on our recent property visits/ absorption data, we add new projects/adjust
pricing on existing projects for Sobha and Prestige. Thus, we change our 12-m
NAV based TP for Sobha to Rs541 (from Rs516) and for Prestige to Rs185 (from
Rs174). We fine-tune our FY14E-FY16E EPS estimates by +0.1%-0.6%. While we
believe Sobha could benefit from higher pre-sales and accelerating cashflows,
we think premium valuations for Prestige adequately reflect its ROE.

Technicals-Hindustan Copper, Greaves Cotton, Praj Industries, JB Chemicals, Sobha Developers, Bharat Electronics :: Business Line

Sobha Developers: Hold :: Business Line

 

Shareholders of real-estate developer Sobha Developers can hold the stock. The company has shown a visible improvement in its sales and earnings growth in the last two quarters of March and June 2012, compared with their year ago numbers.

Its established market presence in Bangalore, besides reasonably successful entry into the new market of Gurgaon have aided growth. Still, at 14 times its expected consolidated per share earnings for FY-13, the valuation is demanding, given that peers trade at low-single digits.

Significant scale-up in revenue in FY-13 and higher volume from real-estate development rather than land sales will be key to improved earnings and reasonable valuations. The company’s sales at Rs 1,408 crore in FY-12 are still marginally lower than its peak sales of Rs 1,431 crore in FY-08.

Net profit at Rs 210 crore is also 9 per cent lower than in FY-08. Revenue booked in FY-13 may be a tad low as the company is moving to a changed revenue recognition policy. It will now recognise revenue on 25 per cent completion of projects from 20 per cent earlier.

Sobha Developers -Revenue recognition still tepid: Prabhudas Lilladher,

􀂄 POCM revenues yet to pick up; land sales prop results: Sobha reported
revenues to the tune of Rs4.3bn, YoY growth of 56%, while a sequential decline
of 17%. Revenues, however, consisted of Rs950m of proceeds from a land sale
in Pune. Hence, the POCM revenues from Real estate stood at Rs2.42bn, while
Rs958m was from the contracts & manufacturing division. The company’s POCM
revenues have remained in the Rs2-2.5bn band and are likely to inch-up in
H2FY13, with several projects likely to reach the completion threshold.

Sobha Developers Q1 Operational Update ‐ Strong performance continues::Prabhudas Lilladher,

􀂄 Strong sales performance continues: Although launches were subdued for the
quarter with only a small villa launch in Coimbatore, sales momentum continued
at the company’s previously launched projects, thereby, ending the quarter at
0.83m sq.ft, representing 25% YoY growth and a marginal sequential decline.
Sales from the Gurgaon project witnessed a strong sequential increase of 24%.
Realizations too remained firm at Rs5,737, an increase of 26% & 7% on a YoY
and QoQ basis, respectively, resulting in total sales of Rs4.79bn. The company’s
sales guidance for FY13 stands at Rs20bn as against sales of Rs17bn clocked in
for FY12.

Consider short straddle strategy on IFCI; go long on Sobha Developers: Business Line

IFCI (Rs 40.25): Despite a strong show last week, the long-term outlook remains negative for IFCI. The stock finds an immediate support at Rs 33.5 and resistance at Rs 47. A close above the resistance can lift the stock towards Rs 66, though in between, Rs 54 could act as a minor resistance zone. On the other hand, a close below the support could weaken the stock to Rs 29.

First cut - Sobha Developers Ltd: Microsec

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Sobha Developers Ltd announced its Q4 FY12 and Annual results on 7^th May 2012. Sobha Developers has posted Standalone net profit of Rs 89 Crore for the fourth quarter ended March 31, 2012 as compared to of Rs 40 Crore for the quarter ended March 31, 2011, representing an increase of 121%. Total income has increased from Rs 321 Crore for the quarter ended March 31, 2011 to Rs 477 Crore for the quarter ended March 31, 2012, representing an increase of 48%.

EBITDA Margin of the company increased from 24% to 37%, registering an improvement of 13%.

On a Yearly basis, its net sales increased by 1.4% to Rs 1396  crore and PAT increased by 10% to Rs 200 crore. EBITDA margin has improved from 25% to 31%.

Sobha Developers Ltd - Quarterly-Standalone - [INR-Crore]							Sobha Developers Ltd -Annual-  [INR-Crore]
DESCRIPTION	Q4 12	Q4 11	Q3 12	YOY	QOQ		DESCRIPTION	FY12	FY11	YOY
Revenues	476.90	321.00	313.70	48.57%	52.02%		Revenues	1396.50	1376.70	1.44%
Total Expenditure	296.30	243.10	238.40	21.88%	24.29%		Total Expenditure	962.60	1026.70	-6.24%
EBITDA	180.60	77.90	75.30	131.84%	139.84%		EBITDA	433.90	350.00	23.97%
EBIDTA Margins	37.87%	24.27%	24.00%	1,360.17 BPS	1,386.57 BPS		EBIDTA Margins	31.07%	25.42%	564.74 BPS
Other Income	1.30	4.20	2.30				Other Income	6.30	5.90
Operating Profit	181.90	82.10	77.60				Operating Profit	440.20	355.90
Interest	37.10	21.60	9.30	71.76%	298.92%		Interest	106.20	84.50	25.68%
Exceptional Items		0.00					Exceptional Items	0.00	0.00
PBDT	144.80	60.50	68.30				PBDT	334.00	271.40
Depreciation	11.70	6.90	10.60				Depreciation	38.80	27.80
PBT	133.10	53.60	57.70				PBT	295.20	243.60
Tax	44.10	13.40	17.60				Tax	94.40	61.20
Net Profit	89.00	40.20	40.10	121.39%	121.95%		Net Profit	200.80	182.40	10.09%
PAT  Margins	18.66%	12.52%	12.78%	613.88 BPS	587.93 BPS		PAT  Margins	14.38%	13.25%	112.97 BPS
Equity Capital	98.10	98.10	98.10				Equity Capital	98.10	98.10
Face Value (In Rs)	10.00	10.00	10.00				Face Value (In Rs)	10.00	10.00
Diluted EPS	9.08	4.10	4.09	121.46%	167.82%		Diluted EPS	20.48	18.61	10.05%

Regards,

Team Microsec Research