Sobha shares jumped 14 percent on Tuesday after the company reported strong sales for the quarter ended September 2021 amid the pandemic-hit real estate market.
The stock price of Sobha rallied as much as 14.11 percent to intraday high of Rs 272.90 on the BSE. At 11:45 am, the shares were trading 10.81 percent higher at Rs 265.00 apiece as against 0.80 percent gains in the benchmark Sensex.
During Q2FY21, Sobha achieved a total sales volume of 891,700 square feet valued at Rs 690 crore, with a total average realization of Rs 7,737 per square feet.
“This performance was achieved despite lockdown being imposed in Bengaluru in the month of July, no new launch during the quarter, uncertain macro-economic outlook and tough real estate sector scenario,” the company said in a regulatory filing.
Sales volume, total sales value and Sobha share of sales value during Q2FY21 were up by 37 percent, 41 percent, 35 percent respectively as compared to Q1FY21.
Own share pre-sales by value were down 5 percent YoY at Rs 530.9 crore as against Rs 561 crore.
The price realization of Rs 7,737/square feet achieved during Q2FY21 is the highest price realization achieved by the company as compared to the past 5 quarters, it said
"We continue to bring down our average cost of borrowing and as a result, cost of borrowing as of 30th Sep 2020 came down meaningfully. As informed during Q121 operational update, enquiry levels are almost at the pre-Covid levels, which will help us to perform better in the second half of the FY 20-21," the company added..
On improved sales momentum, global brokerage CLSA increased its presales estimates for FY21-23 and raised target price to Rs 270 from Rs 252 while maintaining an Outperform rating.
CLSA sees a marginal increase in debt due to its dividend payment in Q2 and has increased its presales estimates for FY21-23.
Jefferies said that the 2Q sales performance of Sobha shows a much faster normalization to pre-COVID levels by organized developers than the broader industry.
“Sobha's reported gross pre-sales were +1 percent YoY, reflecting good company performance an improving housing market. The core Bangalore market was impacted by a July lock-down and trailed overall market recovery, but volumes here were still +11 percent QoQ. No new launches happened in 1HFY21. We believe Sobha would have gained market share in 1H,” brokerage Jefferies said.
The brokerage maintained Buy rating with a target price of Rs 315.