How has been the historical performance of Sobha?

Dec 01 2025 11:08 PM IST

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Sobha's historical performance shows fluctuating net sales, peaking at 4,038.69 crore in March 2025, but declining operating profit and earnings per share. While profit after tax improved from the previous year, total liabilities increased, indicating growing financial obligations amidst challenges in profitability.

Revenue and Operating Performance Trends

Sobha’s consolidated net sales have shown a general upward trajectory, rising from ₹2,109.80 crores in March 2021 to ₹4,038.69 crores in March 2025. Despite a dip in fiscal 2021, likely influenced by broader economic conditions, the company rebounded strongly with a notable increase in sales in subsequent years. The total operating income mirrored this pattern, reflecting the company’s core business strength without reliance on other operating income, which remained nil throughout the period.

Operating profit before other income (PBDIT excl OI) declined from ₹1,115.10 crores in March 2020 to ₹294.33 crores in March 2025, indicating pressure on operational efficiency. However, when factoring in other income, operating profit stood at ₹418.40 crores in March 2025, showing some support from non-core activities. The operating profit margin excluding other income contracted significantly from 29.71% in March 2020 to 7.29% in March 2025, signalling rising costs or margin pressures in recent years.

Profitability and Earnings Analysis

Profit after tax (PAT) has experienced considerable volatility, peaking at ₹297.10 crores in March 2019 and falling to ₹94.69 crores by March 2025. The PAT margin similarly declined from 8.63% in 2019 to 2.34% in 2025, reflecting tighter profitability. Earnings per share (EPS) followed this trend, dropping from ₹30.51 in 2019 to ₹8.85 in 2025, with diluted EPS slightly higher at ₹9.28 in the latest fiscal year. These figures suggest that while Sobha has maintained profitability, it faces challenges in sustaining earlier high margins and earnings levels.

Interest expenses have decreased from ₹681.60 crores in March 2020 to ₹195.57 crores in March 2025, indicating some deleveraging or improved cost of debt. Profit before tax (PBT) also declined from ₹433.00 crores in 2020 to ₹133.00 crores in 2025, consistent with the overall profit trend.

Balance Sheet and Financial Position

Sobha’s shareholder’s funds have nearly doubled from ₹2,431.20 crores in March 2020 to ₹4,560.51 crores in March 2025, supported by a significant increase in reserves from ₹2,336.40 crores to ₹4,453.57 crores over the same period. This growth in equity base reflects retained earnings accumulation and possibly capital infusion.

Total liabilities have increased from ₹11,010.17 crores in 2020 to ₹16,966.30 crores in 2025, with total debt reducing from ₹3,100.27 crores to ₹1,130.88 crores, signalling a strategic reduction in borrowings. Long-term borrowings rose moderately, while short-term borrowings declined sharply, indicating a shift in debt maturity profile. The company’s book value per share improved substantially from around ₹249 in 2020 to ₹426 in 2025, enhancing shareholder value.

Cash Flow and Liquidity Overview

Operating cash flow has fluctuated, with ₹199 crores generated in March 2025 compared to a peak of ₹1,150 crores in March 2023. Investing activities have consistently been cash outflows, reaching ₹1,179 crores in 2025, reflecting ongoing capital expenditure or investments. Financing activities showed a large inflow of ₹992 crores in 2025, contrasting with outflows in previous years, possibly due to new borrowings or equity issuance. The net cash inflow was modest at ₹12 crores in 2025, with closing cash and bank balances improving to ₹1,808.87 crores, indicating a stronger liquidity position.

Summary of Sobha’s Historical Performance

Over the past six years, Sobha has demonstrated resilience with a steady increase in revenue and shareholder equity, despite facing margin pressures and fluctuating profitability. The company’s efforts to reduce short-term debt and bolster cash reserves have strengthened its financial stability. However, the decline in operating and net profit margins suggests challenges in cost management or competitive pressures within the real estate sector. Investors should weigh the company’s growth in scale and equity against the contraction in profitability when considering its long-term prospects.

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