Sobha slips 4% on weak Q3, but analysts stay bullish on long-term growth

Sobha shares slipped 3.9 per cent on the BSE, logging an intra-day low at ₹1,466.10 per share. The selling pressure on the counter came after the company posted its Q3 results.

 

At 10:47 AM, Sobha’s share price was trading 1.53 per cent lower at ₹1,503.45 on the BSE. In comparison, the Sensex was up 0.69 per cent at 82,993.02. The stock commands a market capitalisation of ₹16,076.81 crore, with its 52-week high at ₹1,732.45 per share and 52-week low at ₹1,075.7.

Sobha Q3 results

In the December quarter (Q3FY26), Sobha reported a net profit of ₹15.4 crore, as compared to ₹21.7 crore in Q3FY25, down 29 per cent year-on-year (Y-o-Y).

 

Its revenue from operations stood at ₹983.1 crore, down 21.7 per cent, from ₹1,256.9 crore a year ago. 

 

The company's Earnings before interest, tax, depreciation and amortisation (Ebitda) stood at ₹78.5 crore, as compared to ₹100 crore a year ago. Ebitda margin for the quarter was flat at 8 per cent year-on-year (Y-o-Y). 

 

“In Q3, we completed 915 homes, taking cumulative deliveries for the first nine months to 2,100 homes. While procedural delays in securing Occupancy Certificates (OCs) have temporarily moderated quarterly profitability, we remain fully confident in accelerating project completions moving forward, which will drive substantial improvements in our P&L performance. With gross debt at a prudent ₹910 crore and a negative net debt, our robust balance sheet uniquely equips us to capitalize on emerging opportunities while effectively managing the inherent cyclicality of residential real estate,” said  Jagadish Nangineni, managing director, Sobha.

Brokerage view on Sobha 

JM Financial Institutional Securities | Buy | Target: ₹1,850

JM Financial said Sobha continued to deliver strong pre-sales momentum, with bookings rising 52 per cent Y-o-Y to ₹2,100 crore in Q3FY26. The company launched three projects during the quarter, including its first project in Mumbai. Pre-sales were led by Bengaluru (71 per cent), followed by NCR (16 per cent) and Kerala (7 per cent).

 

The brokerage believes Sobha is well-placed to deliver 30–35 per cent pre-sales growth in FY26, supported by a strong Q4 pipeline, including upcoming launches in Gurugram (0.8 msf), Noida (2.4 msf), Chennai (1.5 msf), and Calicut (0.8 msf).

 

While the performance remained soft, management indicated that projects nearing completion over the next 15 months should deliver Ebitda margins of around 18 per cent, improving to 30 per cent thereafter. With a diversified project pipeline of about ₹35,000 crore, JM Financial expects 15 per cent compound annual growth rate (CAGR) in pre-sales over FY26E–28E.

Motilal Oswal | Buy | Target cut to ₹1,825 from ₹1,884

The brokerage noted Sobha’s Q3FY26 pre-sales came in lower than expected, leading Motilal Oswal to cut its FY26–28 estimates. It added that the margin improvement guided by management did not materialise during the quarter, prompting a downward revision to its margin assumptions.

 

Despite the shortfall, analysts highlighted that Sobha continues to offer strong long-term growth visibility through the monetisation of its large land reserves. Recent fundraising and healthy operating cash flows also strengthen the company’s ability to pursue new land acquisitions, further enhancing its future project pipeline.

 

Motilal said it has incorporated the updated launch pipeline and new project additions for the year. It expects ongoing and upcoming projects to generate ₹11,600 crore in gross cash flows, valuing these at around ₹6,700 crore. Sobha’s land bank of 154 msf is valued at ₹8,600 crore, assuming monetisation over 25–75 years. 

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