ICICI Securities Upgrades Sobha Limited to BUY with ₹1,669 Target – 15% Upside on FY26 Recovery and 10 Msf FY27 Launch Pipeline

ICICI Securities Raises Sobha Target on Record Bookings and Pipeline Momentum

ICICI Securities has upgraded Sobha Limited to a BUY rating with a revised target price of ₹1,669, implying approximately 15% upside from current levels. The upgrade reflects confidence in the developer's turnaround trajectory following a strong operational year and visibility into future growth.

FY26 Performance Drives Confidence

Sobha clocked FY26 sales bookings of 5.5 million square feet worth ₹81.4 billion, up 30% year-on-year in value terms. The company's share of sales value rose 35% to ₹67.06 billion. The company recorded gross sales bookings of 5.5 million square feet, representing an 18% year-on-year increase, while in value terms, bookings rose sharply by 30% to ₹81.4 billion, marking a decisive turnaround following a muted FY25 performance.

The rebound reflected improved demand across Sobha's core markets and better execution. Bengaluru recorded its highest-ever pre-sales of ₹4,478 crore in FY26, contributing 55% to total pre-sales. The National Capital Region clocked pre-sales of ₹2,455 crore, accounting for 30% of total pre-sales.

Ambitious Launch Pipeline Underpins Growth

Heading into FY27, the company plans to launch approximately 10 million square feet across Bengaluru, Gurugram and other markets, as it aims to achieve 30% year-on-year sales booking growth in FY27 as well to ₹106 billion. With planned launches of nearly 10 msf in FY27 and a total pipeline exceeding 20 msf, Sobha is positioning itself for continued expansion.

The company plans to launch nearly 10 million square feet in FY27 alone, including a large township project in Hoskote, Bengaluru, with an estimated gross development value of ₹70 billion. ICICI Securities models for FY27E and FY28E gross sales bookings of ₹104 billion and ₹124 billion respectively on the back of the 20 msf launch pipeline till FY28.

Improving Realizations and Financial Health

Average realization is expected to rise from ₹14,686 per square foot in FY26 to ₹16,670 in FY27 and ₹17,503 in FY28. Gross area sold is projected to grow from 5.5 msf in FY26 to 6.3 msf in FY27 and 7.1 msf in FY28.

The company expanded to 13 cities and launched 6.04 million square feet of new projects, maintaining a net cash position with ₹18,020 million in cash against gross debt of ₹10,023 million as on March 31, 2026. Net debt-to-equity is expected to remain negative, indicating a net cash position over the forecast period.

Valuation Methodology and Upside Rationale

ICICI Securities values Sobha using a Sum-of-the-Parts methodology. The revised target price of ₹1,669 reflects improved realizations and scale benefits. The valuation incorporates expectations of sustained booking growth and margin normalization.

RoCE is expected to rise to 28.4% by FY28, while RoE could reach 19.2%, reflecting enhanced capital efficiency.

Key Monitorables

A key monitorable over FY27–28 is improvement in its reported EBITDA margins, which have been in single-digits between FY25–26. Margin expansion remains the key catalyst. Improvement in EBITDA margins from current single-digit levels will be critical in supporting earnings upgrades and valuation re-rating.

Developer Context: Sobha's Operational Footprint

Sobha Limited has delivered 148 million sqft across 600+ projects in 27 cities since 1995, with zero abandoned projects. The builder 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, surpassing the next-placed Prestige Group by over 18 million sqft.

Sobha is India's only fully backward-integrated real-estate developer — managing in-house concrete, glazing, interiors, woodwork, MEP, and mattresses. The company's construction workforce exceeds 12,400 employees directly on payroll – the highest among Indian listed developers as a ratio of revenue. This direct employment model is a key differentiator versus competing developers that rely heavily on sub-contracted labour, and supports tighter quality control, on-time delivery and lower project abandonment risk.