On Friday, Sobha shares closed at Rs 1,269 on the NSE, down by Rs 26.25 2.03%.
A ‘buy’ call by brokerage Motilal Oswal along with buying action in the realty stocks triggered a sharp rally in Sobha shares this week. The brokerage in a review note highlighted the company’s focus on sustainable growth with healthy cash flows and profitability.
“After underperforming its listed peers on pre-sales growth over FY21-23, we believe Sobha is set to outperform in terms of growth given its focus on unlocking its vast land reserve and exploring external growth opportunities through its healthy balance sheet,” the brokerage note said.
The outperformance is also expected to be driven by improvements in profitability and further visibility in the monetisation of some of its large land parcels in Bengaluru that could lead to a re-rating in its implied land valuation, the Motilal Oswal note said.
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The realty firm also reported a 37% increase in sales bookings at Rs 1,951.6 crore in the third quarter of this financial year, mainly on the back of strong housing demand in Bengaluru. Its sales bookings stood at Rs 1,424.7 crore in the year-ago period.”The Q3 (third quarter) of this financial year has been the best-ever sales quarter for Sobha,” the company said in a regulatory filing late on Thursday.
Also Read | Sobha Q3 sales bookings up 37% to Rs 1,952 cr on strong housing demand
The update did not cheer the investors much and triggered a profit booking on Friday.
The week’s actions have dragged the stock into an overbought zone, with momentum indicators RSI and MFI reported at 75.6 and 93 by Trendlyne.
Sobha is also trading above its 50-day and 200-day simple moving averages (SMAs). The multibagger stock has given returns of 117% over the last 12 months which is higher than the Nifty Realty index and broader Nifty at 98% and 21%, respectively.
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