Sobha Q1 FY27 Results (NSE: SOBHA)
Signal: Margin pressure
The read
Q1FY27 standalone revenue grew 37% YoY, driven by strong real estate sales, but EBITDA margin contracted 148bps due to a surge in other expenses. PAT growth of 26.5% was aided by high other income and a deferred tax credit. The company faces regulatory overhangs (ED attachment, IT demands) as highlighted by the auditor. The sequential revenue decline of 37% from Q4FY26 reflects quarter lumpiness typical of real estate.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹1,257.59 Cr | +36.8% | -36.6% |
| EBIT | ₹109.9 Cr | +20.2% | |
| Net profit | ₹58.04 Cr | +26.5% | |
| EPS | ₹5.43 | +26.6% | |
| EBIT margin | 10.9% |
P&L walk
Revenue grew 36.8% YoY driven by real estate segment (+45.7% YoY) while contractual grew modestly (+6.2%). Gross margin expanded ~190bps YoY to 37.9% as raw material costs (purchases + consumed) fell sharply from 50.3% of revenue to 28.4%, partially offset by higher land cost and subcontractor cost. Employee cost grew 15.5% YoY, slower than revenue. EBITDA margin contracted 148bps YoY to 10.9% due to higher other expenses (₹2,713 Mn vs ₹1,629 Mn, +66.5% YoY). Finance cost up 5.3% YoY, depreciation up 21.5%. Other income remained high at ₹586 Mn (6.0% YoY growth). PAT grew 26.5% YoY, tracking EBITDA growth. EPS ₹5.43, +26.6% YoY.
Segments
Real estate segment is the dominant driver, contributing 83% of total revenue and 78% of segment results. Segment revenue grew 45.7% YoY, while contractual grew just 6.2%. Segment result for real estate rose 70.9% YoY, indicating margin improvement. Unallocable expenditure (₹944 Mn) and finance costs (₹314 Mn) significantly reduce reported profit before tax.
Key positives
- Revenue growth of 36.8% YoY, led by real estate segment (+45.7% YoY).
- Gross margin expanded ~190bps YoY to 37.9%, driven by lower raw material cost as % of revenue.
- PAT grew 26.5% YoY and EPS ₹5.43, up 26.6% YoY.
- Finance cost down 27.2% QoQ, improving interest coverage to 4.4x.
- Segment result for real estate up 70.9% YoY, indicating strong operational performance.
Key concerns
- EBITDA margin contracted 148bps YoY to 10.9% due to other expenses surging 66.5% YoY.
- Sequential revenue declined 36.6% from Q4FY26, highlighting lumpy revenue recognition.
- Other income (₹586 Mn) is high relative to operating profit, making earnings dependent on non-operative items.
- Auditor emphasizes ED attachment of land parcels (₹2,016 Mn) and IT demand orders (₹842 Mn) as uncertainties.
- Company approved NCD issue of up to ₹1,000 Cr, potentially increasing leverage.
Research and educational content only. Not investment advice.