Sobha Developers, the publicly held realtor, is expected to post an increase in debt by close to 10% as there has been sharp spike in construction spends, land acquisitions and a Rs 57 crore dividend payout recently. This is the second consecutive quarter of Fy13 in which the company will report a increase in debt as the company on a drive to buyout some of the joint development partners in various of projects. During first quarter of this fiscal, debt grew by close to Rs 50 crore as it acquired its partners stake in a project in Kerala. The gearing is now just under 0.6 times at close to Rs 1,200 crore.
Sobha reported strong Q2FY13 sales volumes of 0.95msf (up 13% QoQ, flat YoY) aided by higher volumes in Thrissur and Bangalore, with new project launches seeing good sales worth Rs 527 crore. "For Q2FY13, we estimate revenue/PAT growth of 5/7% QoQ led by first-time revenue recognition for some projects. While operations remained strong, the same is already priced into the stock, and we see limited scope for outperformance from hereon," Arun Aggarwal, an analyst with Religare Research said.
The company is hoping that there will be new space sales of 3.75 million square feet valued at Rs 2,000 crore for FY 13 and by end of September 2012, it has already registered sales of around 1.78 million square feet at a value of around Rs 1,007 crore. The new sales achieved during H1 of FY13 has witnessed a growth of 11.2% as against the same period last year.
During the first quarter of Fy13, the company reported 21.3% YoY (down 12.7% QoQ)
revenue growth. It reported 27.5% operating margin (up 391bps YoY) whereby the margin on monetization of land sales stood at 16%. "Adjusting for this, operating margin was at 30.7% (122bps higher than our estimate), thanks to higher realisation in projects. In 1QFY13, Sobha expensed around 80% of total interest costs as against 65-70% historically, leading to a 126% YoY rise in interest costs. Consequently, Sobha posted Rs 45 crore profit," said Param Desai, an analyst with Nirmal Bang.
Sobha Developers' stock had gained half a% on NSE and is trading at Rs 373 a share at 1.40 pm on Monday.
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