Landbank rationalization; pipeline provides healthy visibility
Valuation and view
SOBHA continues to provide strong growth visibility by unlocking its vast land reserves. Additionally, the ongoing fund raise and strong cash flows will enable the company to focus on new land acquisitions, which will further enhance its growth pipeline.
We incorporate the updated launch pipeline and new projects acquired during the year. The ongoing and upcoming projects are likely to generate INR150b of gross cash flows and value the same at INR95b.
SOBHA’s ~190msf of balance land reserve is valued at INR90b, assuming 25-75 years of monetization. The company trades at 8.5x FY25E EV/EBITDA (based on FY25E pre-sales), which is at a 15-30% discount to its comparable peers (PEPL, GPL, MLDL, and Sunteck).
We reiterate our BUY rating on the stock with an unchanged TP of INR2,213, indicating a 44% upside potential.
Sobha’s landbank rationalization; pipeline provides healthy visibility
