Sobha stock up 7% on robust Q2 earnings performance

Revenue grew 57% year-on-year (y-o-y) to ₹819 crore, with the residential segment revenue rising 96% y-o-y to ₹654 crore. However, its contractual and manufacturing segment saw revenues decline by 13% y-o-y in Q2FY22. Sales volumes rose 51% sequentially and annually in the September quarter to1.35 million square feet (msf). Sales value at Rs1,030 crore improved 49% on a year-on-year (y-o-y) basis.

Although Bengaluru continues to be a key market for the company with sales volume of 0.80msf, comprising 59% of the total volume, contribution from non-Bengaluru is growing. During the quarter, other regions have contributed 41% of total sales volume as compared to 26% during Q1FY22.

Another positive takeaway for investors in this stock was that the company’s net debt declined by ₹39 crore in the September quarter with the cost of debt coming down to 8.85% compared to 9.32% in 2QFY21. Consequently, the key net debt/equity ratio improved marginally from 1.15 times in the June quarter to 1.13 times at the end of the September quarter.

According to the company’s management, it has achieved a real estate cash inflow of Rs725 crore during Q2, up which 44% as compared to Q2FY21. The management expects real estate net cash flow of ₹7,213 crore from current ongoing and completed projects. Its net operating cash flow of ₹312 crore during the first half of the FY22 is 40% against the same period of FY21 and is the highest in the last five years.

Further, its completed unsold inventory at 0.44msf at the end of the September quarter is one of the lowest in the real estate sector, said the management.

In the last one year, shares of the company have risen by 226%, massively outperforming the S&P BSE Realty index, which has rallied 144% in the same span.