Sobha to focus on sales of Rs 11,000 crore housing units in ongoing projects

Leading realty firm Sobha Ltd will focus on selling housing units worth Rs 11,000 crore in ongoing projects over the next few years, and will be cautious in launching new projects amid the Covid-19 pandemic, a top company official said.

In an interview with PTI, Sobha Ltd Vice Chairman and Managing Director J C Sharma said the company’s sales bookings would improve in the remaining three quarters of 2020-21 fiscal year from Rs 488 crore achieved during April-June despite over two months of lockdown.

However, he didn’t give sales guidance for the full fiscal year due to uncertainities because of coronavirus pandemic.

In the last fiscal, the company had clocked record sales bookings of Rs 2,880 crore.

“We are very bullish on the housing sector in the medium to long term. IT and pharma sectors are doing well. The emphasis will be on strengthening India’s manufacturing sector going forward. This will help in creating housing demand,” Sharma told PTI.

Moreover, he said, low interest rate for home loans at around 7 per cent and rock-bottom residential prices have improved affordability of prospective customers.

The Covid-19 pandemic is also driving the need for larger homes as well as home ownership.

Sharma said construction activities have started for all its projects and migrant labourers are gradually returning from their native places.

On launches, he said the company has not launched any projects so far this fiscal year.

“We are preparing for launches of new projects. But, it will depend on external environment conditions,” Sharma said.
At present, he said the focus is on selling housing units available for sale in the existing projects.

“We currently have inventories worth about Rs 11,000 crore in our under construction projects,” Sharma said.

Of this, ready-to-move-in housing units in completed projects stood at Rs 256 crore at the end of the June quarter.
Sharma said the company would concentrate on managing its cash flow efficiently to ensure debt remains stable in ongoing fiscal.

According to the company’s latest investor presentation, its net debt stands at around Rs 3,000 crore.

Sharma said the company’s contractual business is also doing well with an order book of Rs 2,366 crore at the end of the first quarter.
On overall housing prices, he said there is no scope for reduction with rates being at rock bottom.

Sharma said consolidation in real estate sector has gained momentum after the outbreak of Covid-19, benefiting large players with strong balance sheets.

He said the company would evaluate any joint venture or development management opportunities to add more projects in its portfolio with minimal investment.

Recently, Sobha Ltd reported a 93 per cent decline in its consolidated net profit at Rs 6.6 crore for the quarter ended June, as sales and construction activities were stalled because of the Covid-19 pandemic.

Its net profit stood at Rs 90.6 crore in the year-ago period.

Total income fell to Rs 359.3 crore in the first quarter of this fiscal from Rs 1,193.1 crore in the corresponding period of the previous year.

Sales bookings fell 37 per cent during April-June quarter to Rs 487.7 crore.

Sobha has so far completed real estate projects with total development of 58.74 million sq ft.

It has under-construction projects with total developable area of 38.52 million sq ft, and 14.36 million sq ft of super built-up area in pipeline.

Apart from Bengaluru, which contributed around 75 per cent to its sales bookings in April-June quarter, Sobha has presence in Gurugram, Chennai, Pune, Kochi, Thrissur, Kozhikode, Coimbatore and Gift City in Ahmedabad.