SOBHANSEOctober 22, 2025

Sobha Limited

8,672words
72turns
13analyst exchanges
3executives
Management on call
Jagadish Nangineni
MANAGING DIRECTOR – SOBHA LIMITED
Yogesh Bansal
CHIEF FINANCIAL OFFICER – SOBHA LIMITED
Saishwar Ravekar
ICICI SECURITIES LIMITED
Key numbers — 40 extracted
INR3,981 crore
nment interventions. During the first half of this year, we achieved a real estate sales value of INR3,981 crores, which is higher by 30% compared to the last year in the same period. Bangalore has contributed
30%
t half of this year, we achieved a real estate sales value of INR3,981 crores, which is higher by 30% compared to the last year in the same period. Bangalore has contributed 48%; NCR 38%; and 10% fro
48%
s, which is higher by 30% compared to the last year in the same period. Bangalore has contributed 48%; NCR 38%; and 10% from Kerala region of the overall sales. Our total sales for the year were su
38%
is higher by 30% compared to the last year in the same period. Bangalore has contributed 48%; NCR 38%; and 10% from Kerala region of the overall sales. Our total sales for the year were supported by
10%
by 30% compared to the last year in the same period. Bangalore has contributed 48%; NCR 38%; and 10% from Kerala region of the overall sales. Our total sales for the year were supported by the sale
2.84 million
ion of the overall sales. Our total sales for the year were supported by the sale of 1,576 homes, 2.84 million square feet across all operational markets with an average price realization of INR14,028 per squ
INR14,028
mes, 2.84 million square feet across all operational markets with an average price realization of INR14,028 per square feet. In Q2 alone, we have achieved sales of INR1,902 crores, consisting of 770 homes w
INR1,902 crore
an average price realization of INR14,028 per square feet. In Q2 alone, we have achieved sales of INR1,902 crores, consisting of 770 homes with Bangalore contributing 70% of the sales despite any new significan
70%
e, we have achieved sales of INR1,902 crores, consisting of 770 homes with Bangalore contributing 70% of the sales despite any new significant project launch. Coming to new project launches. Cumulati
rs,
new significant project launch. Coming to new project launches. Cumulatively, in the past 6 quarters, we launched over 10 million square feet in 12 projects. However, the slower first half launches we
10 million
ct launch. Coming to new project launches. Cumulatively, in the past 6 quarters, we launched over 10 million square feet in 12 projects. However, the slower first half launches were impacted due to several
8 million
nal issues, and we are making our best efforts to catch up in the second half and launch at least 8 million to 9 million square feet for the entire financial year across 7 to 8 projects. We a
Guidance — 20 items
Jagadish Nangineni
opening
“In Q2 alone, we have achieved sales of INR1,902 crores, consisting of 770 homes with Bangalore contributing 70% of the sales despite any new significant project launch.”
Jagadish Nangineni
opening
“We are happy to inform that during current week, we will be launching Sobha Magnus in South Bangalore.”
Jagadish Nangineni
opening
“Also, we are working on our subsequent project plans rapidly for about 24 million square feet.”
Jagadish Nangineni
opening
“Our project delivery teams have also increased the pace of project completions with completions of 2.25 million square feet in the first half of the year.”
Jagadish Nangineni
opening
“We aim to complete overall at least 5.5 million square feet in this financial year.”
Jagadish Nangineni
opening
“Improved profitability would reflect as we increase the volume of project completions.”
Yogesh Bansal
opening
“From all completed and ongoing projects, we expect total INR22,867 crores of future inflow.”
Yogesh Bansal
opening
“The cost to complete this project is estimated INR13,000 crores, thereby generating marginal cash flow potential of close to INR9,800 crores at project level post sales and marketing spend.”
Yogesh Bansal
opening
“Additionally, we expect to generate INR7,100 crores of marginal cash flow from forthcoming projects of 16.69 million square feet, which shall be launched over the next 6 quarters and the cash flow realized over 5- to 6-year timeframe.”
Jagadish Nangineni
qa
“While that has not been very helpful during the very high inflationary period like – which we have seen between 2021 to 2024, the – going forward, if the inflationary pressures continue to be stable like we have seen in the past year or so, then we should have a unique advantage in terms of managing the cost and delivering within time.”
Risks & concerns — 4 flagged
Do you see any risk of delays that could push some of these launches in this financial – current financial – to the next financial year?
— Biplab Debbarma
Is there any risk uncertainty regarding that?
— Biplab Debbarma
And is that growth concern a function of purely price increases in the housing sector?
— Gaurav Khandelwal
No, good relevant question because margins is indeed a concern even for us.
— Jagadish Nangineni
Q&A — 13 exchanges
Q
I have 2 questions, one for Mr. Jagadish, and one for Mr. Yogesh. So, to Mr. Jagadish, my question is, as you scale in a market that’s becoming more price sensitive and competitive, what are the biggest execution challenges you foresee, especially in balancing design quality and delivery timelines and customer experience? How are you preparing the organization to sustain this kind of a differentiation?
Jagadish Nangineni
Thank you, Sucrit. I think you had one more question for Yogesh, which we’ll take once I complete this answer. Well, as you are aware, we – Sobha has a unique execution model, which is backward integrated, where the entire design, execution and some parts of the manufacturing are done in-house. This gives us a unique advantage in terms of speed of delivery and also managing the cost of delivery. While that has not been very helpful during the very high inflationary period like – which we have seen between 2021 to 2024, the – going forward, if the inflationary pressures continue to be stable li
Q
First, on the sales performance of this quarter, we saw a good surge in sustenance demand. Just wanted to know what actually worked, especially, I guess, in the projects like Townpark, what went right for us this quarter to have a healthy contribution? And then how do you see the Gurgaon projects, which were launched last year? Any sort of action you think you need to take there to have a good velocity on those projects? Yes, that’s my first question.
Jagadish Nangineni
Thank you, Pritesh. The Q2 sales, like you have observed, the majority of the contribution has been from Townpark for 70%, right? And all of them are sustained sales. This shows good on- ground demand for the end user-based products. And particularly within the ticket sizes of INR2 crores to INR3 crores. And Townpark, one of the projects, which is – which has that kind of inventory has done really well. So, ticket size definitely helps in terms of the sales. And of course, our sustained sales and marketing efforts also has helped. And specifically, when it comes to projects like Townpark, wher
Q
Wish you all a very Happy Diwali. So, my first question is, I mean, you had a very good strong quarter. Congratulations on that, although you didn’t have any major launches. And in the second half, I understand that you have a significant number of large launches lined up. So, if all these launches materialize as planned, looking at the strong absorption in Bangalore and Noida, you have a few launches in Noida. Is it possible we cross INR10,000 crores of presales this year?
Jagadish Nangineni
Thank you for the wishes, Biplab. The launches in the second half seems to be on track. And if the overall momentum continues and some parts of it, if we are able to achieve similar momentum in all the project launches because these project launches are spread across some of the other cities where launch is not necessarily the – gives the biggest impetus to sales. There are steady launches in locations like Kerala, in Chennai. So given that, I mean, we would stick to still our earlier guidance of about INR8,500 crores of what we are doing. If we can do – I mean, we aim to do much better than t
Q
Good performance despite no launches and also, I mean, encouraging to see the cash flow – overall cash flows. A couple of questions. Firstly, on the reported margins, again, we are seeing these to remain low. So how do you think about these numbers and especially the current project level margins? If you can just give some view on the margins first.
Jagadish Nangineni
Right. Thank you, Girish. On the reported margins, unfortunately, the – this quarter specifically, although we could recognize good revenue, there were – like Yogesh has mentioned in his initial comments, we had to take provision for certain charges, which are related to BBMP ground rent, which were not earlier recorded because of – we had a favorable outcome in the previous – whenever we completed projects. However, since because of new demands that have come in from the authority, we had taken that provision. Otherwise, it could have been slightly better than what we have done. And there are
Q
At the industry level, across major parts of India, we see that the almost all large real estate developers are in very good shape in terms of balance sheet. And all are now competing for the larger-sized complexes because that’s the clear trend. In this context, when we look at new business development that we probably at Sobha have engaged, how would you rate Sobha’s BD in the last 1 year? And why I’m asking this more specifically is to understand from a competitive landscape perspective that is the cost of acquisition increasing in a market where the sale prices are probably at hitting the
Jagadish Nangineni
Right, Dhruvesh. No, good question, which is essentially surrounding BD for these projects. In fact, if the margins or results of those new projects that we are going to do business development today would actually result in some kind of P&L impact probably after 5 years because you would do BD today and then probably launch the projects in a year or so, and those projects would start getting completed 3 to 4 years hence. So, I mean, the impact for that from a P&L point of view would come much later. But that said, the basic question from your side is whether the – since BD has become competit
Q
Jagadish, good to see the uptick in numbers. Just 2 questions. So firstly, on the pipeline for the next 6 months, is there any NCR project that you are launching? Or this is skewed in favor of Bangalore?
Jagadish Nangineni
There are 3 projects that we envisage to launch in NCR, one small service apartment kind of project in Gurgaon and one phase of a residential project in Gurgaon. And third is there is a project that we plan to launch in Greater Noida. These 3 projects are also part of this. All these 3 put together, it would be about 3.5 – roughly about 3.5 million square feet. Okay. And this is all coming in the second half of the year, right? Yes. Okay. Great. Jagadish, second question is a little more on the industry and what I see in the last 4 years in your own numbers as well. So basically, we hear a lot
Q
Happy Diwali. I have a question which is more generic on the industry norms rather than Sobha’s operations in itself. Because you are pioneers of the business that you do, which are some of the micro markets that you operate in where you're seeing concerns around growth? And is that growth concern a function of purely price increases in the housing sector? Or is it something else which is driving that concerns around growth? So, any color on this would be really appreciated.
Jagadish Nangineni
Thank you, Gaurav. Well, as you know, we are operating in 14 cities and as of now and our prime growth driver markets, specifically in the past 2 to 3 years, have been our mothership, which is Bangalore. And Bangalore itself has several micro markets. And even in the micro markets that we are operating in, we have predominant presence in Southeast and East that continues to do well. While these are doing well in Bangalore, the North Bangalore is also picking up really well because of the capacity constraints that we are seeing in the rest of the micro markets. So hence, there is a – from a mic
Q
My question was on the margins itself. If you look at the first half, the revenues on the real estate have increased by more than 50%, okay. And if I remove the other income from EBITDA, we are very nearly flattish. So, what happened in that ’22, ’23 phase, the projects what we sold that the margins went so low because that was one of the periods where everybody was increasing their prices on the projects what they were selling. And what gives us the confidence that those problems will not reoccur, or things will not go that wrong in the future, just from the learning perspective in the organi
Jagadish Nangineni
Sure, Himanshu. No, good relevant question because margins is indeed a concern even for us. And it’s been our focus right from the beginning. And we, this was, like I was mentioning before, this was a one-off period where we were operating in very high inflationary environment. That said, that is one. Second is while, and majority of these revenues that we are recognizing now, while the prices was rising in ’21, ’22, the cost also significantly increased, and that’s reflective of what we are seeing in terms of margins. And I don’t think that issue would recur if we are able to increase our sca
Q
Two questions from my side. First, I mean, over the last 4, 5 years, the industry clearly has seen the benefits of premiumization. Our own – I mean, sales in terms of ticket size, the data that we see has clearly seen a move towards higher ticket items till FY ’25. Now in the first half of FY ’26 and especially in Q2, we again saw very good contribution from the up – to INR2 crores or INR2 crores to INR3 crores ticket sizes. Now I know one should not really focus too much on 1 quarter or half. But do you think now probably we have reached a point where the mid-income segment will probably claw
Jagadish Nangineni
Thank you for the wishes, Parvez. Coming to premiumization and the impact, actually, we have to look at probably 2 different aspects. One is the pricing premiumization and second is the actual ticket size, right? Indeed, there was a big demand for larger homes as we saw it in COVID and immediately after COVID. And the affordability for – at that particular time for the pricing and for the – for that ticket size was very good. So, it’s not only that it was – there was a requirement for a larger home, but the ability to afford that larger home given that at that point of time, pricing was – both
Q
Jagadish, Congratulations on a decent quarter. So, I have 2 questions. One is that the total business development done across the city. So, you are going to a launch heavy season. So just wanted to understand how are you replenishing land in NCR, Gurgaon, Noida, Bombay, so – and Bangalore? And second question is when you spoke about margins, and you said that next year could be seeing a substantial jump in margins. So in light of that, I think which quarter – I’m not asking you which margins will improve from which quarter, but decisively in this year, I mean, is it third or fourth quarter whe
Jagadish Nangineni
Yes. Thank you, Parikshit. The, from a business development point of view, we are active in growth markets, both in Mumbai and in NCR. And in Bangalore, we are continuing to do our – under the radar consolidation and also any specific opportunities that we get due to our existing whether relationships or presence within certain micro markets. So, replenishing the current inventory that we have is a continuous process. In Bangalore, we are quite confident of – since there is enough pipeline of new launches, which is spread for the next few quarters, we are quite – and there is enough visibility
Q
My question relates to margin. So, one of your Bombay-based peers just released their numbers and their operating margin is 60%. And so, when I compare your margin, so your margins are very low. And since we are backward integrated, I fail to understand why there is – why our margins are so low.
Jagadish Nangineni
Thank you, Mr. Vipul. Like we have been mentioning in our earlier calls and even this call, the majority of the revenue that we are recognizing in this quarter and probably future, past quarters have been largely joint development projects where the cost increases have impacted in both ways, both for our construction cost and also land cost because land cost is part of the joint development cost. And, that’s one. Second is also our method of accounting is a little different from some of the Bombay-based developers’ accounting. Ours is on completion, whereas some of the other years that we see
Q
Again, a continuation on business development. So, I think we have already spent INR1,700 crores worth of capital raised through rights issue, yet we have a positive cash balance sheet – net cash balance sheet, I would say. Does it make sense for us to be a little more aggressive on business development versus what we have been doing since last 3-4 quarters? And what would be our target markets specifically? I mean, Bangalore, we do have pipeline. Does it make more sense to then focus on NCR, Mumbai, which is our new markets where we are looking to strategically scale up our business? Yes, tha
Jagadish Nangineni
Absolutely, Pritesh, that’s one of the reasons for us to raise capital, and that gives us enough leverage for us to do increased business development in future. But that said, as you already also know that the new business development is coming at a much higher cost, and we would like to look at margin of safety as well. And given that we need to balance both, we are building a healthy pipeline of new BD. And from a geographic standpoint, it is both in NCR, Mumbai, Bangalore, all these 3 and a little bit of Hyderabad. All these 4 geographic markets are – we are continuing to build up a pipelin
Q
Happy Diwali to all. Sir, I have, well, I would like to ask, I have a couple of questions. First is you have, in your 4 October press release, you have mentioned that our quarterly sales value was INR19.03 billion, that is INR1,903 crores, out of which Sobha share was INR1,537 crores. Whereas in this quarter, when we reported, the number is INR1,407 crores. So just wanted to understand what is the discrepancy? What is the reason for this difference? Secondly, in your quarter 1 con call, you had mentioned that you would be growing at around 30% this year, that is in FY ’26 and over FY ’25, that
Jagadish Nangineni
Thank you, Pankaj. First, I’ll take the second question first, which is the – I mean, last year, we did about a little over INR6,000 crores and INR8,000 crores is roughly about 33% over that. And that’s what we are aiming at. So largely, it’s consistent with what we have been doing earlier, which is essentially growth over the last year and the previous year, which is roughly about INR6,400 crores. So hence, largely, we are – the numbers that we are talking about is in terms of percentage growth are similar. And second, coming to your specific question related to the Sobha shares, not very cle
Speaking time
Jagadish Nangineni
27
Moderator
15
Pritesh Sheth
4
Pankaj Bobade
4
Abhinav Sinha
3
Yogesh Bansal
2
Sucrit D. Patil
2
Biplab Debbarma
2
Girish Choudhary
2
Dhruvesh Sanghvi
2
Opening remarks
Saishwar Ravekar
Good morning, everyone. On behalf of ICICI Securities, I would like to extend a warm welcome to all the participants joining the Sobha Limited Quarter 2 FY '26 Results Conference Call today. We are pleased to have with us Mr. Jagadish Nangineni, the Managing Director; Mr. Yogesh Bansal, the Chief Financial Officer, representing the management of Sobha Limited. Before we commence with the proceedings, I would like to take this opportunity to wish everyone a very Happy Diwali. With that, I would now like to hand over the call to the management for their opening remarks, following which we will move on to the Q&A. Thank you, and over to you, sir.
Jagadish Nangineni
Good morning, everyone. This is Jagadish from Sobha Limited. Thank you, Saishwar. We are pleased to connect with you today post declaring our Q2 and H1 ’26 financial results. We had already shared the details of the operational performance during the – in the first week of October. In continuation of our pursuit to improve our timing of declaring quarterly results, this quarter as well, we have done well, thanks to our improved processes across functions enabling this outcome. We delivered a strong and stable performance in Q2 this year, building on momentum already created in the previous quarter in terms of real estate sales with highly integrated sales and marketing efforts. It also reflects the steady demand on the luxury real estate in a growth economy with improving macroeconomic parameters and timely government interventions. During the first half of this year, we achieved a real estate sales value of INR3,981 crores, which is higher by 30% compared to the last year in the same
Yogesh Bansal
Good morning, everyone, and thank you for joining us today. Wishing everyone warm greetings of the Diwali. I am pleased to share our financial performance for quarter 2 and H1 for the year ’25-’26. I will begin with cash flow, covering the quarterly and half yearly performance and future visibility, and then briefly touch upon the P&L before opening the floor for the questions. During the quarter from all businesses, we collected a total of INR2,046 crores. We crossed the INR2,000 crores quarterly collection milestone for the first time, thereby recording a highest historic high. For H1, we collected INR3,824 crores, recording a healthy 30.9% growth over H1 ’25. Real estate business contributed 90.2% to overall collection, that is INR1,846 crores in Q2 and INR3,445 crores during H1 period. Contracts and manufacturing businesses contributed INR200 crores in Q2 and INR380 crores in H1. We generated INR513 crores of net operational cash flow in the quarter for the half year, and it was IN
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