At Rs 670 crore, the company booked the highest quantum of sales for any quarter, registering a growth of 45 per cent year-on-year and 26 per cent sequentially. The last quarter performance also helped the company beat its annual forecast of Rs 2,000 crore of sales bookings (achieved Rs 2,210 crore) and 3.75 million sq ft of volume (3.76 million sq ft). Puneet Jain and Aditya Soman of Goldman Sachs say the company has beaten their own sales forecast through periodic launches and entry into higher value locations.
The growth in bookings for the financial year, thus, was a combination of volume growth and realisations, both of which grew 14 per cent year-on-year. Helped by rising property prices in Bangalore and better product/ geography mix, realisations moved up to Rs 5,897 per sq ft in FY13 compared to Rs 5,173 per sq ft in FY12. Realisation gains for the quarter were sharper at 17 per cent year-on-year at Rs 6,294 per sq ft. This was aided by a better product mix in favour of high realisation row houses (Aristos) sold in Bangalore and a 29 per cent sequential jump in NCR volumes where average realisation was more than Rs 10,000 per sq ft, says Nirmal Bang's Param Desai. The company believes the increase in average realisation by 14 per cent year-on-year will help protect margins and manage rising input costs on account of inflation.
The company has coming residential launches of 5.7 million sq ft (Sobha's share) in FY14 with a sales value of Rs 2,700 crore (Sobha's share) and commercial launches of 2.3 million sq ft. Higher realisations and uptick in volumes should ensure revenue growth helping the company maintain margins as well as improve cash flows. Says Aashiesh Agarwaal of Edelweiss Securities, "We expect Sobha to generate net operating cash flows of Rs 1,000 crore over FY14-15 from ongoing projects of 17 million sq ft and new launches of 12 million sq ft." Most analysts have pegged a 12-month price target range of Rs 490-515, which from the current level of Rs 358 indicates an upside of 36 per cent. The stock remains one of the few realty plays, with 80 per cent of Bloomberg analysts recommending a buy.