Despite reporting a 55% year-on-year decline in consolidated net profit to ₹33 crore for Q2FY27, brokerage firm Motilal Oswal has maintained its 'Buy' rating with a target price of ₹1,710 per share, representing approximately 45% upside potential from current market levels. According to the brokerage report, while the Bengaluru-based developer posted its highest-ever quarterly collections from homebuyers and kept its sales growth target for the year, the same results show revenue down 31% and profit down by more than half. The brokerage's optimism is driven by Sobha's strong project pipeline and expected sales momentum in the coming quarters.
Real estate developer Sobha Ltd achieved its second-highest quarterly booking figure with pre-sales rising 16% year-on-year to ₹2,210 crore in the September quarter of FY27. As per Motilal Oswal's report, Bengaluru remained its largest market, accounting for 60% of bookings, followed by the National Capital Region (NCR) at 27%. The company's residential collections increased 4% year-on-year to ₹1,920 crore, marking its highest-ever quarterly figure. Motilal Oswal estimates that pre-sales could reach ₹13,000 crore by FY28, with the company targeting 30% year-on-year growth in pre-sales for FY27, equivalent to around ₹10,500 crore in bookings. The company launched 7.92 million sq. ft. of saleable area across five projects in Bengaluru, Gurugram and Calicut during H1 FY27, with an estimated sales potential of ₹11,200 crore.
According to Motilal Oswal's report, Sobha has 18 projects in its upcoming launch pipeline, covering 20.4 million square feet and carrying a combined gross development value (GDV) of ₹31,400 crore. Eight of these projects, valued at around ₹18,000 crore, are expected to launch in the second half of FY27. This substantial pipeline provides the company with significant opportunities to bring more homes to market and support continued sales growth. The brokerage has valued Sobha's ongoing and upcoming projects at ₹14,800 crore using a discounted cash flow (DCF) method, though it has not assigned value to an additional 1,745 acres of land that remain under various stages of consolidation.
Real estate developer Sobha Ltd reported a 55% year-on-year decline in consolidated net profit to ₹32.95 crore for the September quarter of FY27, compared with ₹72.52 crore in the corresponding quarter last year. The company's total income fell to ₹1,017.21 crore in the second quarter from ₹1,469.32 crore in the corresponding period of the preceding financial year. Despite the overall decline, the company achieved a 16% year-on-year increase in real estate sales value to ₹2,206 crore during the quarter, with average sales realisation standing at ₹15,522 per sq. ft. and collections of ₹2,084 crore. Sobha shares fell over 4% on Wednesday with stock trading at ₹1,126.80 apiece at 9:37 am after the company announced its Q2FY27 results. The stock has fallen 26.87% in the last 12 months and 22.76% year-to-date.
While collections grew strongly, Sobha's financial metrics showed mixed results. Net operational cash flow declined 14% year-on-year to ₹440 crore, while land investment spending increased 76% to ₹620 crore during the quarter. The company maintains a strong financial position with net debt at minus ₹340 crore and a net debt-to-equity ratio of minus 0.07. During the quarter, Sobha paid a final dividend of ₹6 per equity share for FY26, amounting to approximately ₹64.17 crore. The company's EBITDA stood at ₹68.73 crore in Q2FY27, a 32.4% year-on-year decline from ₹101.64 crore in the corresponding period last year. Motilal Oswal expects residential collections to grow at a compound annual growth rate (CAGR) of 21% between FY26 and FY28, reaching ₹10,300 crore.
