TREND ON Q2 RESULT BUY SOBHA DEVELOPERS

 Buy recommendation on Sobha Developers is maintained with a target price of Rs.375 over
one year. The stock is currently traded in the range of Rs.203 range.
 Sales volume continues to increase and the company could maintain sales guidance.
 During 1HFY12, the company sold 1.6 million sq ft, a yoy increase of 13%.
 The company sold 0.94 million sq ft during 2QFY12 as against 0.74 million sq ft in 2QFY11 and 0.67 million sq ft in 1QFY12.
 Sobha is maintaining its contracted sales guidance of 3 – 3.5 million sq ft for FY12. In value terms, this is amounted to around Rs.1500 crore.
 NCR (National Capital Region) and Mysore (newer markets to the company) have contributed
12% of 1QFY12 sales.
 Bangaluru volume also recorded healthy growth of 23% yoy and 35% qoq. Average sales
price excluding NCR region recorded moderate 3% growth.
 Of the newly launched projects of 3.25 million sq ft, around 20% (0.65 million sq ft) is sold in 1HFY12.
 Contracted sale of Rs.790 crore in 1HFY12 is up 48% yoy. Current inventory is 4.5 million sq ft.
 Buy rating is maintained with a target price of Rs.375 over one year and it seems that
company’s entry in to new markets would drive growth while continued improvement in cash
flow driven by the residential segment and better execution may lead to a re-rating of the
stock.