SOBHA - Investment Analysis

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

Investment Rating: 3.5

📊 Long-Term Investment Analysis

Sobha Ltd (SOBHA) is a mid-cap real estate developer focused on luxury residential and commercial projects. While it has delivered impressive long-term returns, its current valuation and profitability metrics raise caution for fresh long-term investment.

✅ Strengths

Brand & Market Position: Strong presence in Tier-1 cities and expanding into Tier-2 markets

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Debt Control: Debt-to-equity ratio of 0.26 is healthy for a real estate firm

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Promoter Confidence: Holding steady at 52.88%

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Historical Returns

5-Year CAGR: 31.2%

10-Year CAGR: 17.9%

15-Year CAGR: 11.3%

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⚠️ Weaknesses

Valuation: P/E of 165 is extremely high vs. industry average of 40.2

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PEG Ratio: -12.0, indicating poor earnings growth relative to valuation.

ROE & ROCE: Weak at 2.68% and 6.44%, suggesting inefficient capital use

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Dividend Yield: Just 0.19%, not attractive for income investors.

Quarterly Volatility: PAT dropped from ₹40.9 Cr to ₹13.6 Cr, a 66.7% decline.

💰 Ideal Entry Price Zone

Based on valuation and technical trends

Intrinsic Value Estimate: ₹628.54

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Current Price: ₹1,564

DMA 50/200: ₹1,527 / ₹1,454

Suggested Entry Zone: ₹1,300–₹1,450 This range offers a better margin of safety and aligns with technical support and valuation comfort.

🧭 Exit Strategy & Holding Period

📈 Holding Strategy

Time Horizon: 5–10 years to benefit from luxury housing demand and urban expansion.

Growth Targets

2025: ₹1,713–₹1,768

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2026: ₹2,316–₹2,383

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2030: ₹8,160–₹8,282

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2035: ₹23,807–₹24,164

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🚪 Exit Strategy

Partial Exit: If price exceeds ₹2,300–₹2,500 by 2026–2027, consider booking profits.

Trailing Stop: Use a stop-loss below ₹1,300 to manage downside risk.

Re-evaluate: If ROE remains below 5% and PEG stays negative, consider switching to stronger peers like DLF or Godrej Properties.

Would you like a side-by-side comparison with other luxury real estate stocks to identify better long-term value?

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karnatakakendra.com

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www.screener.in

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stockpricearchive.com

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stockpricearchive.com

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