Sobha reported fresh sales at Rs 6.1 billion, +3/64% q-o-q/y-o-y respectively, as sales witnessed improvement across regions with 14% sales contributed by 3QFY18 launches. Bangalore reported improvement in sequential volume primarily contributed by Dream Acres and launch during the quarter. In addition Kochi luxury project continued to see sales improvement in 3QFY18. Gurgaon market sales remained robust as project approached completion. The company launched two projects during the quarter after a hiatus of four quarters. We expect debt to decline as collections is expected to improve as demand letters were issues post RERA registration. Based on our analysis, Sobha will benefit from GST regime with higher input credit for vertically integrated business units. In addition, Sobha’s Dream Acres project will continue to contribute significantly in pre-sales as affordability remains high for the product. Pickup in demand and execution of land parcels (Hoskote- 280acres) remains key monitorables.
Bangalore reported stable sales of 0.64msf (+5% q-o-q). NCR witnessed stable volumes as the project approaches completion. Kochi witnessed higher demand from customers (especially NRI) as company completed the mock-up apartment last quarter attracting higher footfalls and sales. In addition project benefitted from marketing efforts of both Puravankara and Sobha.
Bangalore sales of 0.64msf with proportion of sales from the region at 69%. Dream series phased launches has improved Doha’s product offering in sub Rs 10 m segment contributing c.40-50% to Bangalore sales. The company opened one building for sale during the quarter to tap incremental demand (0.2msf). Dream Acres sales is expected to remain robust as customers are likely to benefit from CLSS MIG scheme (extended till Mar’19) with cost of funding declining materially for households with income less than Rs 1.8 million per annum. Two projects were launched during the quarter — Sobha HRC Pristine (0.8msf) in Jakkur Bangalore and Sobha Silver Estate (0.2msf) in Thrissure (Villas).