Geojit Financial Services Maintains 'Accumulate' on Sobha Limited with ₹1,583 Target – ₹18,600 Crore Unrecognised Revenue Backlog Highlighted
Geojit Maintains Accumulate Rating on Sobha Limited
Geojit Financial Services has maintained its "Accumulate" rating on Sobha Limited with a revised target price of Rs 1,583 per share, implying an upside potential of approximately 15% from the current market price of Rs 1,382.
Revenue Backlog Underpins Growth Visibility
Geojit highlighted a major positive: Sobha's substantial unrecognized revenue balance of approximately Rs 18,600 crore, expected to convert into reported revenues over the coming years as projects reach completion milestones, significantly improving earnings visibility and providing a strong foundation for future profitability. This backlog carries embedded project-level EBITDA margins of 30–34%, with newer sales expected to carry even higher margins, closer to 40%.
Record Sales and Strengthening Balance Sheet
Despite minor execution delays affecting FY26 guidance, Sobha delivered impressive operating and financial performance, with revenue rising 29% year-over-year and profit more than doubling. The company achieved a record fiscal year 2026, reaching INR 8,136 crores in real estate sales while achieving a net cash positive position of INR 800 crores, supported by INR 1,802 crores in cash against INR 1,002 crores in gross debt.
Gross debt reduced to Rs 1,002 crore from Rs 1,131 crore in FY25, average borrowing cost declined to 7.69%, cash collections increased 26% year-over-year to Rs 7,798 crore, and debt-to-equity ratio remained comfortable at approximately 0.2x.
Premium Project Launches Drive Realisations
High-end developments such as Sobha Rivana and Sobha Altair played an important role in supporting pricing power and revenue growth. The investment thesis is anchored by robust launch visibility, healthy demand across key markets, particularly Bengaluru and NCR, and a sizeable pipeline that is expected to drive sustained sales growth over the next several years.
Valuation Framework and Margin Expansion Outlook
Geojit values Sobha using a NAV-based framework, incorporating real estate assets, rental assets, construction and manufacturing operations, while applying a discount to the company's estimated NAV. Expected margin expansion is projected over FY27-FY28.
About Sobha Limited
Sobha Limited, founded in 1995, has delivered 148 million sqft of built space across 600+ projects in 27 Indian cities and the Middle East, making it one of the top five Indian residential developers by delivered volume. The builder's 210 Bangalore projects covering 68 million sqft constitute the single largest luxury residential delivery footprint in the city.
Sobha was founded by PNC Menon in 1995 with a vision to establish an integrated construction company combining real estate development with in-house interiors, glazing, concrete and MEP divisions; the group's roots go back to Sobha Decor established in 1976, which served as the interior contractor for premium real estate developers across the Middle East. The company's construction workforce exceeds 12,400 employees directly on payroll – the highest among Indian listed developers as a ratio of revenue – supporting tighter quality control, on-time delivery and lower project abandonment risk.
Forward Momentum
Sobha enters FY27 with strong operational momentum, one of the largest launch pipelines in the sector, improving financial flexibility, and healthy demand across key residential markets. Geojit believes the combination of strong pre-sales growth, improving realizations, substantial unrecognized revenue, and expected margin recovery positions Sobha favorably for sustained earnings expansion over the next two years.