Shares of Sobha Limited climbed over 3% in early trading on Thursday after Investec initiated coverage on the stock with a “Buy” rating and a target price of ₹2,150, indicating a potential 41% upside from its current price of ₹1,516.
Key Highlights from Investec’s Report:
- Late Recovery Play: Investec identifies Sobha as a late recovery beneficiary in the ongoing real estate cycle, particularly gaining momentum in its Bengaluru projects due to robust demand and higher realizations.
- Financial Strength: The company has maintained healthy operating cash flows (OCF) and actively reduced leverage on its balance sheet, showcasing financial discipline.
- Strategic Expansion: Sobha is planning to expand into Mumbai and Noida markets, aiming to establish a strong foothold in these high-growth regions over the next 2-3 years.
- Growth Projections: The brokerage forecasts a 18% compound annual growth rate (CAGR) in presales for FY24-FY27, driven by a solid project pipeline and effective land monetization strategies.
- Joint Development Model: Sobha’s focus on expanding its joint development (JD) business is expected to enhance profitability while leveraging its land reserves.
Stock Performance:
- As of 9:27 AM, Sobha’s shares were trading 3.27% higher at ₹1,566.50 on the NSE, reflecting positive investor sentiment following Investec’s bullish outlook.
