Sobha to raise ₹2,000 cr via rights issue; share hits 52-week high

Shares of residential & commercial projects company Sobha Ltd hit a 52-week high at ₹2,219.00 on the BSE today after the company board approved raising up to ₹2,000 crore through a rights issue of shares.

Shares opened a gap up at ₹2,098 on the BSE and hit the intra-day high at ₹2,219, which is also its 52-week high. At the current share price, the company's m-cap stands at ₹20,414.15 crore.

The company's board on Wednesday approved the proposal for the issuance of equity shares via rights issue to the eligible equity shareholders.

The rights issue comprises up to 12,107,981 partly-paid up equity shares of face value of ₹10 each of the company at ₹1,651 per share (including premium of ₹1,641 apiece), aggregating up to ₹2,000 crore.

The rights issue will open on Friday, June 28, 2024, and close on Thursday, July 4, 2024. The company says its outstanding equity shares prior to the rights issue are at 94,845,853, and post-issue, it'll remain at 1,06,953,834.

The rights entitlement ratio will be 6 eight equity shares for every 47 fully paid-up equity shares of the company held by the eligible shareholders as of the record date.

Sobha says as of March 31, 2024, it has completed construction of 136.25 million square feet of developable area across 27 cities in India, including contractual projects, and it currently has 38.36 mn sq ft of developable area for projects under various stages of construction.

The company's total income for the financial year 2023-24 stood at ₹3,217.8 crore, down from ₹3,402 crore in 2023. Its EBITDA stood at ₹397.9 crore in FY24, down from ₹461.8 crore in FY23. The company says it made a profit worth ₹49.1 crore in FY24 compared to ₹104.2 crore net profit in the year before. It also reduced net debt from ₹1,639.6 crore as of March 31, 2023, to ₹1,262.2 crore as of March 31, 2024.

Sobha clocked gross sales bookings of 6.1 msf worth ₹6,640 crore, up 28% YoY in value terms, aided by the company launching 7 msf of new projects during the year with the Bengaluru, Kerala and NCR (Gurugram) markets accounting for 90% of sales volumes at an average realisation of over ₹10,000/psf.

As per management, the demand remains resilient and it plans to launch 9msf of new projects in FY25, with an estimated GDV of over ₹9,000 crore, of which 60% is expected to be in Bengaluru. As of Mar’24, SOBHA has an overall ongoing and forthcoming pipeline of 24.4 msf, of which 16.7 msf is in forthcoming projects. “Based on the FY25 launch pipeline, SOBHA guides for at least INR 85bn of gross sales bookings in FY25 vs. INR 66bn achieved in FY24. We model for INR 93bn of sales bookings in FY25E and INR 104bn in FY26E,” brokerage ICICI Securities said in its May 2024 report on the company.