Sobha (SOBHA) Q4 09/10 earnings summary

Executive summary

• FY10 brought a second-half demand revival after a sluggish first half; marketing, product changes, cost controls and capital raising supported higher sales, cash generation and lower debt.

• Delivered 5.57 million sq. ft. during the year: 1.82 million sq. ft. across 10 residential projects and 3.75 million sq. ft. across 26 contractual projects.

Financial highlights

• Net sales were Rs. 11,139.92 million, up 14.29% YoY; PBT was Rs. 1,602.71 million, up 10.14%, and PAT was Rs. 1,366.62 million, up 24.60%.

• PBDIT was Rs. 2,597.21 million, down 9.43% YoY; adjusted for neither one-time items nor other stated adjustments, it equaled 23.30% of total revenue versus 29.42%.

• Finance expenses fell to Rs. 671.40 million from Rs. 1,052.14 million; depreciation was Rs. 323.10 million versus Rs. 360.33 million.

• EPS was Rs. 14.91 versus Rs. 15.04; proposed dividend was Rs. 2.50 per Rs. 10 share, a 25% rate.

Outlook and guidance

• Management expected industry growth to exceed projected national economic growth and set ambitious short- and long-term goals for sustainable growth and expansion.

• Strategy targets revenue growth through launches in existing and new geographies, including Tier I cities, broader market segments, contract expansion and increased manufacturing capacity.

• At March 31, 2010, projects under execution totaled 13.32 million sq. ft.: 8.50 million residential, 0.58 million commercial and 4.24 million contractual.