Brokerage Eyes Big Gains for Sobha Despite Recent Share Price Drop

Brokerage firm Emkay Global Financial Services remains positive about real estate developer Sobha despite the company's shares falling 18 percent this year. Sobha shares closed down 1.51 percent at ₹1,197 on the BSE on Monday, October 5. The stock has underperformed both the BSE Realty index, which fell 4 percent, and the Sensex, which dropped 15 percent over the same period. Over the last six months, however, the stock has risen 3 percent. The share price previously hit a 52-week high of ₹1,730.90 on November 10 last year and a 52-week low of ₹1,131.10 on April 2 this year.

Sales Performance

Sobha recorded its second-highest-ever quarterly sales value of ₹2,206 crore in the second quarter of financial year 2027, selling 1.42 million square feet across 828 units. Total sales value grew by 16 percent year-on-year. The firm completed 720 homes totaling 1.49 million square feet across nine wings or blocks, and launched 1.03 million square feet of saleable area covering two projects in Calicut and Mysore. For the first half of the financial year, the company achieved a record sales value of ₹5,862 crore with 3.76 million square feet sold across 2,260 units, marking a 47.2 percent increase in sales value and a 32.4 percent increase in sales area year-on-year.

Analyst Outlook

Emkay has maintained a buy recommendation on Sobha with a target price of ₹1,900, implying a 59 percent upside from its October 5 closing price. The brokerage notes that strong sales momentum from financial year 2026 continued into the first half of financial year 2027, driven by demand in Bengaluru. Emkay expects Sobha to surpass its pre-sales guidance of ₹10,600 crore and reach ₹11,000 to ₹12,000 crore in financial year 2027. Although reported margins have remained in single digits, Emkay expects an uptick from the third quarter onward as high-margin projects like Sobha Neopolis and Sobha Manhattan begin deliveries and revenue recognition.

Context

Real estate developers often experience periods where short-term stock price movements lag behind strong underlying sales figures due to broader market trends. Brokerage target prices reflect projected future valuations based on expected project deliveries and margin improvements rather than immediate market prices.