Sobha Limited Q3 FY26 Earnings Call Summary

Summary

Sobha Limited - Q3 FY26 Earnings Call Summary Friday, January 16, 2026, 4:00 PM IST

Event Participants

Executives 2 Jagadish Nangineni (Managing Director), Yogesh Bansal (CFO)

Analysts 8 Aayush Saboo, Akash Gupta, Biplab Debbarma, Dhruvesh, Fenil, Himanshu Upadhyay, Manoj, Parikshit Kandpal, Pritesh Sheth, Puneet Gulati

Financials & KPIs

Geographic & Segment Commentary

• Bangalore: Achieved highest-ever quarterly sales of over ₹1,500 crores, driven by the SOBHA Magnus launch which sold 80% in its debut quarter. The city remains the core market, contributing 40-50% of future growth visibility with the 5.4 million sq. ft. Hoskote project planned for Q1 FY27.
• NCR (Gurgaon & Noida): Launched SOBHA Strada (service apartments) in Gurgaon; seeing robust end-user demand in the ₹4-5 crore “sweet spot.” Greater Noida (2.4 million sq. ft.) and Gurgaon (0.8 million sq. ft.) launches are scheduled for late Q4 FY26, pending RERA approvals.
• Mumbai & New Markets: Expanded to 13 cities with the launch of SOBHA Inizio in Mumbai; pricing is positioned at a premium (just under ₹50,000 per sq. ft.). Management is taking a “measured approach” in MMR, evaluating further opportunistic land acquisitions including railway land bids.
• Non-Real Estate Businesses: Manufacturing and retail segments contributed ₹575 crores in 9M; however, civil contracting will see a de-growth of ₹150-175 crores starting next year as the company stops taking external third-party contracts.

Company-Specific & Strategic Commentary

• Margin Expansion Path: Current recognized margins (~12%) reflect older projects; projects completing in the next 15 months carry 18-19% margins, while those beyond 15 months are at 34%.
• Backward Integration: Management reiterated their unique model of in-house manufacturing and execution as the primary driver for quality control and luxury positioning.
• Launch Pipeline: Aiming for 8.5 million sq. ft. of total launches in FY26; 9M launches stood at 2.58 million sq. ft., with significant volume backend-loaded in Q4.
• Capital Allocation: Utilized proceeds from a ₹2,000 crore rights issue to maintain a net-debt-free status while funding aggressive land settlements and new project approvals.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Demand Environment in NCR

• Question: Are you seeing softness in Gurgaon as reported by peers? (Puneet Gulati)
• Answer: While speculative demand has slowed, the ₹4-5 crore segment remains a “sweet spot” for end-users. Sobha sees steady site visits and is not seeing a structural slowdown in NCR (Jagadish Nangineni).

Margin Recovery Timeline

• Question: When will EBITDA margins improve from the current 8%? (Parikshit Kandpal)
• Answer: Q4 will be better due to deferred revenue. A significant jump to 18-19% net project margins is expected in 12-15 months, and over 30% for projects maturing beyond 15 months (Jagadish Nangineni).

Mumbai Strategy

• Question: What is the reception and pricing for the Mumbai entry? (Akash Gupta/Fenil)
• Answer: SOBHA Inizio was launched at a premium of nearly ₹50,000/sq.ft. Initial inquiries are strong due to Sobha’s brand presence in Dubai; further expansion will be opportunistic and based on local market learning (Jagadish Nangineni).

Land Payments

• Question: Why were land payments high at ₹240 crores this quarter? (Puneet Gulati)
• Answer: Primarily settlement of old dues for existing land banks and preparation for upcoming launches; very little was for entirely new parcels (Jagadish Nangineni).

Key Takeaway

Sobha Limited delivered a strong operational quarter with record quarterly sales of ₹2,115 crores, though financial reporting was muted due to procedural delays in obtaining Occupancy Certificates. The company is successfully transitioning to a higher-margin regime, with unrecognized revenue of ₹18,600 crores carrying significantly better profitability (30% net margin) than current completions. Strategic focus remains on the “Big Three” markets—Bangalore, NCR, and the newly entered Mumbai—supported by a robust 16.5 million sq. ft. launch pipeline and a net-debt-free balance sheet following a ₹2,000 crore rights issue. While short-term margins are compressed by launch-related marketing spends and external civil contract phase-outs, the medium-term outlook is anchored by expected cash flows of ₹16,300 crores over the next 5-6 years. Management remains confident in achieving its ₹8,500 crore annual sales target, provided RERA approvals for Q4 launches in NCR and Chennai proceed as scheduled.