Sobha Developers is Pursuing Quality

Sobha Developers - Latest Results

(in Cr.)
Sep-11
Jun-11
FY10-11
Revenue
329.4
317.9
1,456.10
Net Profit
40.9
30.9
182.4
EPS
4.17
3.15
18.61
Cash EPS
5.1
3.9
21.43
OPM %
23.19
19.75
21.48
NPM %
12.42
9.72
12.53
 
 
 
 
Sobha Developers - Latest Results

Sobha Developers - Share Price Movement

 
 
 
Weekly H/L
211.95
189
Monthly H/L
239.7
185.25
52 Weeks H/L
327
185
 
( 8 Apr 11 )
( 10 Feb 11 )
Delivery / Var+ELM %
22.87
14.06
 
 
 
Sobha Developers - Share Price Movement

Sobha Developers is Pursuing Quality

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Sobha Developers is Pursuing Quality

Sobha Developers is Pursuing Quality
Sobha Developers is Pursuing Quality | Source

Sobha Developers is Pursuing Quality


Decline of net profit

Sobha Developers, operating the realty domain in India, has posted good results for the Q2 ending 30.09.11 compared to Q1 ended 30.06.11. Both revenue and net profit have increased. The shares of Sobha Developers are traded in the Indian stock markets at Rs.206.80 now (BSE 06.01.12). The shares of Sobha Developers are available in both BSE and NSE. Volumes are low at around 5000 shares a day. But if we compare the Q2 results with the corresponding period of the previous year, net profit is down by 30%. J.C. Sharma is the Managing Director of Sobha Developers. Sobha Developers had new sales of Rs.488 crore in Q2 out of which it was able to book revenue of Rs.214 crore. Realty firms can book revenues on projects only after completion of a quarter of the project.

Projects worth Rs.2500 crore

Sobha Developers was benefited to the tune of Rs.114 crore because of land monetisation last year. During the quarter, the company launched 5.14 million square feet of new projects. After the completion of the projects, the revenue to the company will be around Rs.1100 crore. The company’s cash flow will also improve because of this. Sobha Developers restructured its debt in 2009 amounting to around Rs.1000 crore. At present Sobha Developers has debts amounting to Rs.1350 crore. The current debt equity ratio is 0.7 and the company wants to bring it down to around 0.5. Sobha Developers is eyeing on new sales amounting to Rs.1500 crore this fiscal year. Sobha Developers has lined up projects worth Rs.2500 crore measuring 11 million square feet this fiscal year.

Luxury villa

Sobha Developers completed a luxury residential project called Sobha Emerald, a luxury villa in Coimbatore. The project consists of 61 villa spread across 11.69 acres of land. There are four types of villas ranging from 2700 square feet to 3500 square feet. The company’s net sales have been constantly rising. What is very heartening to see is that its price realisation has risen from Rs.3000 per sq ft to Rs.4000 per sq ft. This shows the confidence of the customers in the company’s quality. The company is Bangalore-based. It has become the first listed company from South India to touch revenue of Rs.1000 crore from residential construction. In its 16 years of existence, Sobha Developers has completed 226 commercial, residential and contractual projects covering about 35.52 million square feet in 18 cities.

Backward integration

Sobha Developers is the only company in India that has the advantage of backward integration. It has its own in-house expertise in mechanical, architectural, interiors, electrical design & execution, glazing, metalworking and concrete products. P N C Menon is the Chairman of the company. The company has more than 2000 employees. Sobha Developers has also plans to get into the business of pre-cut-and-bent, ready-to-use steel. Sobha Developers has a number of group companies supporting its backward integration fully. The company makes no compromise in the quality. In business there is a saying ‘if you chase money, money will elude you; if you chase quality, money will chase you’. Sobha Developers fully follows this principle.

Green buildings

But there are also people who criticise Sobha Developers for having everything in-house. They say it is economically unviable and affects the profitability of the company. When you can get your raw materials from outside sources, why take the trouble of manufacturing them in-house, they question. Sobha Developers is also moving into building more green buildings. The company is aiming to receive LEEDS gold certification for its projects.

Invest for medium and long term

At the current price of Rs.206, one can invest in the company’s shares for medium and long term holding. One can also accumulate the shares at every decline.

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