Why Is Choice Equity Bullish on Sobha With a Target of ₹1840?
Choice Equity Broking has reaffirmed its BUY rating on Sobha Ltd with a target price of ₹1840 per share, highlighting robust demand momentum and improving financial visibility for FY26 and FY27. The brokerage expects the company to benefit from a heavy project launch pipeline, improving pre-sales growth, and margin recovery as high-value projects reach completion.
According to Choice Equity, Sobha’s execution pace and premium positioning in South India’s housing market continue to underpin its valuation re-rating. The company’s ongoing emphasis on quality residential projects and disciplined capital deployment supports sustainable long-term growth.
The brokerage believes that Sobha’s upcoming launches in Bengaluru, Chennai, and Gurugram will contribute significantly to pre-sales momentum over the next two financial years. Additionally, the completion of 4 million square feet (msf) of projects will enhance reported revenue and profitability metrics during FY26–FY27.
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With demand recovery evident in the mid-premium and luxury segments, Sobha’s brand-led pricing power positions it favorably compared to peers. The brokerage projects a significant improvement in operating margins as high-margin projects move from development to completion stage.
The following table summarizes key operational and financial highlights projected by Choice Equity for Sobha:
| Metric | FY26E | FY27E |
|---|---|---|
| Expected Pre-Sales Growth | +18% | +15% |
| Project Deliveries | 4.0 msf | 5.2 msf |
| EBITDA Margin | 18.2% | 20.1% |
| Net Debt / Equity | 0.4x | 0.3x |
| Target Price (Choice Equity) | ₹1840 | Reaffirmed |
Choice Equity attributes Sobha’s growth to its differentiated brand value, focus on timely delivery, and robust project pipeline. The company’s strategy of launching premium residential projects in Tier-I cities aligns well with rising disposable incomes and aspirational demand in the housing segment.
Furthermore, macro factors such as declining unsold inventory levels, stable interest rates, and government incentives for affordable housing continue to act as sector tailwinds, benefitting players like Sobha that have strong balance sheets and high credibility with lenders.
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On the valuation front, Choice Equity values Sobha at a FY26E P/E multiple of 22x, supported by consistent free cash flows and disciplined land acquisition strategy. The brokerage expects return ratios to improve meaningfully as revenue recognition accelerates post-completion of large-ticket projects.
Despite short-term cost pressures from raw materials and interest rates, the company’s focus on operational efficiency and brand-driven pricing offers margin protection. Analysts believe Sobha’s prudent leverage management and steady execution pipeline reinforce its long-term investment potential.
Investor Takeaway
Indian-Share-Tips.com Nifty Expert Gulshan Khera, CFP®, who is also a SEBI Regd Investment Adviser, notes that Sobha’s business model emphasizes sustainable growth, backed by cash flow discipline and brand premium. Choice Equity’s target of ₹1840 reflects both structural housing demand and a focus on profitability recovery through FY27. Investors can consider accumulating gradually, aligning with India’s housing upcycle.
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Related Queries on Sobha and Real Estate Sector
- Why Has Choice Equity Assigned a ₹1840 Target to Sobha?
- How Will Sobha Benefit From FY26–FY27 Project Launches?
- What Are the Key Tailwinds Supporting India’s Real Estate Growth?
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
