⚠ Disclaimer: This report is generated using AI tools and is for informational purposes only. It does not constitute investment advice. Please consult a registered financial advisor before making any investment decisions.
SOBHA - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.0
| Stock Code | SOBHA | Market Cap | 14,818 Cr. | Current Price | 1,385 ₹ | High / Low | 1,732 ₹ |
| Stock P/E | 64.3 | Book Value | 424 ₹ | Dividend Yield | 0.22 % | ROCE | 6.98 % |
| ROE | 3.31 % | Face Value | 10.0 ₹ | DMA 50 | 1,478 ₹ | DMA 200 | 1,492 ₹ |
| Chg in FII Hold | -0.15 % | Chg in DII Hold | -0.26 % | PAT Qtr | 30.7 Cr. | PAT Prev Qtr | 104 Cr. |
| RSI | 41.4 | MACD | -29.0 | Volume | 1,82,692 | Avg Vol 1Wk | 1,44,475 |
| Low price | 1,075 ₹ | High price | 1,732 ₹ | PEG Ratio | -8.14 | Debt to equity | 0.23 |
| 52w Index | 47.1 % | Qtr Profit Var | 11.4 % | EPS | 21.6 ₹ | Industry PE | 30.2 |
📊 Core Financials
- Quarterly PAT at 30.7 Cr vs 104 Cr previously, showing sharp decline in profitability.
- ROE at 3.31% and ROCE at 6.98% reflect weak capital efficiency.
- Debt-to-equity ratio at 0.23 indicates low leverage, providing financial stability.
- EPS at 21.6 ₹ offers a moderate earnings base, but growth momentum is weak.
💹 Valuation Indicators
- P/E ratio: 64.3, much higher than industry average of 30.2, suggesting overvaluation.
- P/B ratio: ~3.3 (1,385 ₹ / 424 ₹ book value), showing premium pricing.
- PEG ratio: -8.14, negative due to declining earnings, highlighting valuation risk.
- Intrinsic value appears lower than current price, limited margin of safety.
🏢 Business Model & Competitive Advantage
- Sobha operates in real estate development, focusing on residential and commercial projects.
- Competitive advantage lies in brand recognition and premium housing projects.
- Exposure to cyclical real estate demand impacts earnings stability.
📈 Entry Zone & Long-Term Guidance
- Entry zone: 1,200–1,300 ₹ range (near support levels and RSI at 41.4, close to oversold zone).
- Long-term holding viable only for investors seeking exposure to premium real estate growth.
- Accumulation should be cautious due to weak profitability and stretched valuations.
Positive
- Low debt-to-equity ratio (0.23), ensuring financial stability.
- Strong brand presence in premium real estate projects.
- Stock trading near oversold RSI levels, potential for technical rebound.
Limitation
- High P/E (64.3) compared to industry average (30.2).
- Weak ROE (3.31%) and ROCE (6.98%).
- Negative PEG ratio (-8.14) indicates poor growth-adjusted valuation.
Company Negative News
- Quarterly PAT declined sharply (30.7 Cr vs 104 Cr).
- FII holdings decreased (-0.15%) and DII holdings also declined (-0.26%).
- Stock trading below 50 DMA (1,478 ₹) and 200 DMA (1,492 ₹), reflecting bearish trend.
Company Positive News
- Debt levels remain low, providing financial resilience.
- Strong brand recognition in premium housing segment.
Industry
- Industry PE at 30.2, much lower than Sobha’s 64.3, highlighting sector undervaluation relative to Sobha.
- Real estate sector expected to grow steadily with urbanization and housing demand, though cyclical risks remain.
Conclusion
- Sobha is financially stable with low debt but faces weak profitability metrics.
- Valuations remain stretched, making accumulation near 1,200–1,300 ₹ more attractive.
- Best suited for long-term investors seeking premium real estate exposure, but caution advised due to earnings volatility and high valuation multiples.
I can also extend this into a peer comparison with DLF and Godrej Properties to highlight how Sobha stacks up in valuation and profitability. Would you like me to draft that next?