Realty Firm Shares Surge 257% in a Year; Brokers Predict Further Upside

Photo : Business today

A mid-cap real estate company, Sobha Ltd, has seen its stock become a multibagger, rallying an impressive 257.17% in the past year. This surge outperformed the sub-index Nifty Realty, which recorded a 128.70% increase during the same period. On Wednesday, Sobha's stock settled 2.96% higher at Rs 1,646, coming within just 2.51% of its one-year high price of Rs 1,688.35, reached earlier in the week on April 9.

Brokerage firm Nuvama Institutional Equities noted that Sobha achieved its best-ever pre-sales in FY24 (2023-24), with pre-sales totaling approximately 6.1 million square feet (msf), valued at Rs 6,640 crore, marking an 8% year-on-year increase. Sobha's share of pre-sales in FY24 reached Rs 5,420 crore, up 28% year-on-year, with a realisation rate of Rs 10,922, representing a 19% increase year-on-year.

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Despite a 3% year-on-year increase in overall sales value in Q4 FY24, Sobha's sales were impacted by delays in launches, with only two projects launched in the last week of March 2024. Nuvama maintained its 'Buy' call on Sobha with a revised target price of Rs 1,876.

During the quarter, Sobha launched four new projects totaling 3.2 msf, with two in Bengaluru and one each in GIFT City and Kochi. Looking ahead, Sobha plans to launch 15–20 msf annually, with increased focus on Bengaluru, Hyderabad, the NCR, and Pune, aiming to further strengthen its market presence.

Technical analysis suggests that the stock has found support at Rs 1,590 level and is likely to move towards Rs 1,774. The stock has surged above recent consolidation, indicating growing interest. However, exchanges BSE and NSE have placed Sobha's securities under the long-term Additional Surveillance Measure (ASM) framework to caution investors about potential volatility in share prices.

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