Markets
Chart beat: Sobha’s debt drops significantly from peak to multi-year low
Summary
- Over the past four years, Sobha has reduced its net debt by 58% from a peak of ₹3,020 crore in FY20 to ₹1,260 crore by the end of FY24.
Bengaluru-focused residential real estate developer Sobha Ltd saw its pre-sales or bookings decline for the first time in 11 quarters in Q4 FY24 due to the delayed launch of two projects. Nonetheless, its debt-reduction effort is a positive factor as the company has been using surplus cash flows to lighten the weight of its balance sheet.
In Q4, net debt stood around ₹1,300 crore, compared to ₹1,600 crore at the end of FY23. Over the past four years, Sobha has reduced its net debt by 58% from a peak of ₹3,020 crore in FY20 to ₹1,260 crore by the end of FY24, Antique Stock Broking said in a report. In this period, Sobha's operating cash flow increased from ₹500 crore to ₹1,090 crore, the report added. The company thus achieved a net debt/equity ratio of 0.54 in FY24 versus 1.2 in FY20.
Sobha’s robust launch pipeline in FY25 and execution capabilities should aid operating cash flows and allow for further debt reduction. According to the management, real-estate demand remains resilient in its key markets. The company plans to launch nine million square feet of new projects in FY25 with an estimated gross development value of over ₹9,000 crore.
