Sobha Limited

Real Estate — Real Estate - Development · NSE

₹1,188.00−₹2.80 (−0.24%)

DalalBaazaar Score

57 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Low

Driven by small-cap size, which brings sharper price swings, a very high earnings multiple, which leaves little margin for disappointment.

In simple words: The business is earning a fairly low return on the money invested in it, with both sales and profits growing well. Valuation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:00 pm

Understanding the Business

Company site ↗

The 60-second version of Sobha Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Sobha Limited engages in the construction, development, sale, management, and operation of residential and commercial real estate under the Sobha brand primarily in India. It operates through the Real Estate, and Contractual and Manufacturing segments.

IndustryReal Estate - Development

SectorReal Estate

Employees4,451

Annual revenue₹5,152 Cr

How does it make money?

Turns over ₹5,152 Cr a year. Of every ₹100 of sales, about ₹4 reaches shareholders as profit, with ₹10 left at the operating level before interest, tax and depreciation. Each of its 4,451 employees supports ₹1.16 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹1.16 Cr

Who are its competitors?

The closest listed comparisons in its industry are DLF LIMITED, GODREJ PROPERTIES LTD, OBEROI REALTY LIMITED. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Little sign of one

Returns on capital of 7.4% are at or below what the capital likely costs. That is the financial pattern of a business competing largely on price, where advantage has to come from execution rather than position.

Peer median ROE10.3%

What is the outlook?

17 analysts covering the stock expect revenue to grow about 20.1% and earnings to grow about 51.9% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+20.1%

Est. earnings growth+51.9%

Analysts17

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +57% while net margin moved +18% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+57%

Margin effect+18%

DalalBaazaar Score

57/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ ROCE of 7.4% is below 10% — capital is not working hard
✗ ROCE has fallen by 4.6 points — returns are eroding
✗ EBITDA margin of 9.7% is thin — little cushion if costs rise
✗ Net margin of 4.1% is slim
• Revenue has compounded at 16.3% a year, which is the base these returns are earned on

Quality vs. Valuation

Company Quality

59/ 100

Average

How good the business is, ignoring the share price entirely.

Valuation

44/ 100

Expensive

What you are being asked to pay, ignoring how good the business is.

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

55.1x

3Y Median

157.3x

40 monthly readings · mean 179.5x · range 57.0x–384.8x

Sector Median

30.2x

median of 3 sector peers

🟢Current valuation is approximately 65% below its 3y median of 157.3x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

⚠️Against its sector it trades 83% above the peer median of 30.2x.

vs. its own history

Cheap

157.3x median over 40 months · -65%

vs. sector peers

Expensive

30.2x median of 3 peers · +83%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

27.3x

PEG

2.41

What's Good / What's Bad

🟢 What's Going Well3

Debt is being paid down
Total debt is down 48% over 3 years.
Very low debt
Debt/Equity of 0.25x leaves the balance sheet with plenty of headroom.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention1

Return on capital is falling
ROCE has declined from 12.0% to 7.4% — often a sign of competition or overexpansion.

Red Flags

1 item require attention · 1 watch

🟡Margins are compressingFinancial
EBITDA margin is down 4.2 points over 3 years.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Deleveraging frees up earnings
Debt is down 48% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
Priced below its own history
The stock trades 65% below its own median multiple. If the business performs as it has and simply re-rates back to normal, that gap is return on its own.
Self-funding with balance-sheet headroom
Positive free cash flow of ₹221 Cr alongside low debt means growth, buybacks or dividends need no outside money — and a downturn can be absorbed rather than refinanced.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Margins are being competed away
EBITDA margin has fallen from 13.9% to 9.7%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
A premium to the sector to defend
It trades 83% above the peer median. That premium needs a reason that persists, or it closes.
Earnings are hard to forecast
Profit has swung sharply from year to year, so any single year — good or bad — is a weak guide to the next. Cyclical earnings deserve lower multiples for that reason.
Size brings its own risk
Small Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 12% a year✓ 16.3% CAGR
Latest reported year was 50.0%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 8%✓ 9.7%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Debt / EBITDA stays below 2x✗ 2.1x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
4Interest cover stays above 3x✓ 3.0x
How much operating profit can fall before interest stops being comfortably covered.
5Free cash flow remains positive✓ ₹221 Cr
Profit that never becomes cash eventually stops being profit.

Investment Checklist

7 / 12 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✗ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✓ Generates positive free cash flow
✓ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✗ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

5 good · 3 neutral · 3 weak

Market Cap

₹12,706 Cr

Small Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

55.1x

Expensive

Expensive — verify against sector peers

P/B Ratio

2.69x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹21.56

Profitable

Profitable on a per-share basis

ROE

4.1%

Weak

Weak capital efficiency

ROCE

7.4%

Weak

Low return on total capital employed

Debt/Equity

0.25x

Low

Conservative leverage

Revenue Growth (YoY)

50.0%

Healthy

Healthy top-line growth

Profit Growth (YoY)

274.0%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.51%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

₹221 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

P/E (Forward)

16.4x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

3.9%

Weak

Thin margins leave little room for error

Net Margin

4.1%

Average

Average bottom-line conversion

Current Ratio

1.14

Adequate

Adequate, but no real cushion

Beta (vs Nifty)

0.51

Defensive

Steadier than the market

52W Range Position

10%

Near low

Near its 52-week low

Technical Snapshot

SMA 20 / SMA 50

1204.3 / 1247.9

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

38.1

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹3,275 Cr	₹3,063 Cr	₹4,017 Cr	₹5,152 Cr	+16.3%
EBITDA	₹455 Cr	₹386 Cr	₹433 Cr	₹500 Cr	+3.2%
EBITDA Margin	13.9%	12.6%	10.8%	9.7%	—
PAT (Net Profit)	₹104 Cr	₹49 Cr	₹95 Cr	₹193 Cr	+22.9%
EPS	₹10.7	₹5.04	₹9.28	₹18.09	+19.1%
ROE	4.2%	2.0%	2.1%	4.1%	—
ROCE	12.0%	9.1%	5.8%	7.4%	—
Total Debt	₹2,027 Cr	₹1,940 Cr	₹1,183 Cr	₹1,057 Cr	-19.5%
Free Cash Flow	₹1,027 Cr	₹523 Cr	₹69 Cr	₹221 Cr	-40.0%

🟢 Revenue has grown at 16.3% a year over 3 years.

🟢 EBITDA has grown at 3.2% a year over 3 years.

🔴 EBITDA Margin has fallen from 13.9% to 9.7% over 3 years (-4.2 pts).

🟢 PAT (Net Profit) has grown at 22.9% a year over 3 years.

🟢 EPS has grown at 19.1% a year over 3 years.

🟡 ROE has held roughly flat at 4.1% over 3 years.

🔴 ROCE has fallen from 12.0% to 7.4% over 3 years (-4.6 pts).

🟢 Total Debt has shrunk at 19.5% a year over 3 years.

🔴 Free Cash Flow has shrunk at 40.0% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹19,518 Cr

Total Liabilities

₹14,798 Cr

Cash & Equivalents

₹123 Cr

Operating Cash Flow

₹430 Cr

Capex

-₹208 Cr

Shareholding (proxy)

Institutional Holding

27.2%

Insider Holding

58.5%

Corporate Actions

Dividend Rate

₹6

Ex-Dividend Date

10 Jul 2026

Analyst Consensus

Recommendations

16 Buy · 2 Hold · 0 Sell

Target Price (Mean)

₹1,747.5

+47.1% vs CMP

Target Range

₹1,480 – ₹1,930

Peer Comparison

Company	P/E	ROE
DLF LIMITED	36.6x	10.3%
GODREJ PROPERTIES LTD	30.2x	8.4%
OBEROI REALTY LIMITED	23.5x	14.7%

Recent News

2 positive3 mixed1 general

Sobha (NSEI:SOBHA) Stock Forecast & Analyst Predictions

Simply Wall Street, 14 OctAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Multibagger realty stock Sobha share price jumps 7%, then wipes out gains despite 292% profit surge in Q1 results

Livemint, 21 JulResults

🟢Potentially positiveReported improvement. Check whether it came from volume, price or a one-off item before treating it as a trend.

Sobha Ltd. Share Price Near 52-Week Low and Sector View

Univest, 12 Oct

Sobha Ltd to host Q2FY27 analyst call on October 19, 2026

scanx.trade, 13 OctAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Are DLF, Godrej Properties, Sobha, other realty stocks heading for a rally? Here is why analysts remain bu

The Economic Times, 21 AugAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Sobha Q1 FY27 results: Net profit jumps threefold to ₹51 crore; board approves fundraising plans via NCDs

Upstox, 20 JulResults

🟢Potentially positiveReported improvement. Check whether it came from volume, price or a one-off item before treating it as a trend.

Watch Items

Trading very close to its 52-week low — worth checking whether this reflects a temporary setback or a structural problem.
Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongFinancial Health · Growth

MiddlingValuation · Risk

WeakBusiness Quality · Profitability

Points for each in the Score ↑

Unremarkable in both directions

A reasonable business at a reasonable price. Nothing here is alarming and nothing is compelling, which usually means the decision rests on things this data cannot see — the industry's direction, management's intent, and what else is available to you.

1 of 5 tripwires tripped — Debt / EBITDA stays below 2x · see Key things to watch ↑