Q4 Update: Sobha’s Sales Dip Amid Lockdown
Sobha’s sales fell by a fourth in the quarter ended March as the lockdown hurt real estate demand.
Sobha Ltd.’s sales fell by a fourth in the quarter ended March as the lockdown announced in March hurt demand for apartments.
Total sales value fell 25 percent to Rs 694.5 crore, while Sobha’s share declined 22 percent to Rs 553.6 crore, according to its filing. Average price realisation was down 6 percent year-on-year to Rs 7,668 per square feet. But it rose sequentially due to good demand in the luxury and super-luxury segment.
Sobha has been plagued by lower cash flows, rising debt, few new launches and lack of exposure to annuity generating assets. Shares of the south-based developer tumbled 68 percent in the last 12 months compared with a 37 drop in the Nifty 50 index.
In the January-March period, 73 percent of the total sales came from Bengaluru. Volume in the city fell 20 percent on a yearly basis to 9.06 lakh square feet. The company attributed it to the lockdown to contain Covid-19.
The Sobha launched a super-luxury residential project with a saleable area of 0.23 million square feet in Bengaluru during the quarter. It also plans new launches for 14.09 million sqft space in the coming quarters.
The developer said the contract vertical delivered a strong performance in 2019-20, resulting in highest ever billing and cash inflow.
The company said it has been able to manage cash flows, resulting in reduction of net debt for the March quarter and lower average interest cost sequentially.
Amit Agarwal, research analyst at Nirmal Bang, however, said in a report that cash flows have been weak due to rising debt concerns and higher construction spends since some of the projects were near completion.
