SOBHA - Fundamental Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Fundamental Rating: 2.6

📊 Core Financial Analysis

Profitability & Returns

EPS: ₹9.56 — weak earnings for a ₹1,564 stock.

ROE: 2.68% & ROCE: 6.44% — low return metrics, indicating poor capital efficiency.

PAT Qtr: ₹13.6 Cr vs ₹40.9 Cr — sharp decline in profitability (-66.7% QoQ), despite a YoY jump of 125%, suggesting volatility.

Debt & Leverage

Debt-to-Equity: 0.26 — moderate leverage, acceptable for a real estate developer.

Book Value: ₹427 — trading at ~3.66x book, which is elevated for a company with weak ROE.

Dividend Yield: 0.19% — minimal, typical for reinvestment-heavy businesses.

💰 Valuation Metrics

Metric Value Insight

P/E Ratio 165 Extremely overvalued vs industry PE of 40.2

P/B Ratio ~3.66 High for a low-efficiency business

PEG Ratio -12.0 Negative PEG reflects earnings contraction, not growth

Intrinsic Value ~₹950–₹1,100 Current price is well above fair value, suggesting downside risk

🏢 Business Model & Competitive Edge

Sobha Ltd. is a premium real estate developer with operations in

Residential and commercial projects

Contractual interior and architectural services

Competitive strengths

Brand reputation in South India

Backward integration (design, construction, interiors)

Weaknesses

Low return ratios

Earnings volatility

High valuation without growth support

📉 Technical & Sentiment Indicators

RSI: 47.5 — neutral, no strong momentum.

MACD: 30.1 — bullish crossover, but price action is range-bound.

Volume near average — no strong accumulation or distribution.

DMA 50 & 200 below current price — short-term support, but long-term trend unclear.

FII selling, DII buying — mixed institutional sentiment.

🧠 Investment Guidance

🔍 Entry Zone (If Undervalued)

Wait for correction to ₹1,100–₹1,200

Current valuation is not supported by earnings or returns.

Entry only after signs of margin expansion and earnings stability.

📈 Long-Term Holding View

Avoid fresh entry at current levels

Overvaluation and weak ROE/ROCE.

Monitor for consistent earnings and better capital efficiency.

Prefer peers with stronger fundamentals unless turnaround is evident.

Would you like a comparative analysis with peers like Prestige Estates, Brigade Enterprises, or Godrej Properties to evaluate relative strength and valuation?

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