Investec has initiated coverage on Sobha Limited with a “Buy” rating and a target price of ₹2,150, implying a 41% upside in the stock price from current price of Rs 1,516. The brokerage highlights Sobha as a late recovery play on the real estate cycle, benefiting significantly from robust demand and higher realizations in its Bengaluru projects.
Sobha has consistently delivered healthy operating cash flows (OCF) while actively reducing balance sheet leverage. The company is strategically planning to enter the Mumbai and Noida markets, aiming for a strong long-term presence within the next 2-3 years.
Investec projects an 18% compound annual growth rate (CAGR) in presales over FY24-FY27, backed by a strong project pipeline. The brokerage also emphasizes Sobha’s focus on monetizing its land reserves and utilizing incremental cash flows to expand its joint development (JD) business, which could enhance profitability.
Sobha’s strong execution capabilities and relatively inexpensive valuation compared to peers position it as a compelling investment opportunity in the real estate sector.
