SOBHA Q1 FY26 earnings call.
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Revenue
₹852 Cr
verified against source
Revenue YoY
—
reported change
EBITDA
₹73 Cr
latest reported figure
Source
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Actual signal trajectory
Where this quarter sits.
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What the record says.
Sobha Limited delivered its highest-ever quarterly pre-sales of INR 2,078.8 crores in Q1 FY26, a landmark achievement driven by the successful launch of Sobha Aurum in Greater Noida—its first project in that micro-market. Total sales volume reached 1.44 million sq ft at an average realization of INR 14,395/sq ft. However, financial performance was severely impacted by delayed occupancy certificates (OCs) for five Bangalore projects, which prevented recognition of approximately INR 650 crores in revenue and INR 150 crores in PBT, resulting in weak EBITDA margin of 8.1% and PAT margin of just 1.5%. Collections remained robust at INR 1,778 crores (+15% YoY) with net operational cash flow of INR 395 crores. The company maintains strong financial footing with INR 1,706 crores cash against INR 1,019 crores gross debt and has INR 17,245 crores of balance revenue to be recognized from sold units. Management targets 30% YoY pre-sales growth for FY26 and expects significant margin recovery as OCs are received and new launches come online in Q3-Q4.
Colored figures show movement against the previous available record.
Guidance to track
- Management targets 30% increase in pre-sales over FY25 levels, expecting to significantly exceed last year's performance through new launches and sustained demand across markets.
- At least one new project launch expected in Q2 FY26, valued at approximately INR 950 crores, with launches in Bangalore and Gurgaon planned.
- Majority of the ~8 million sq ft pipeline launches are skewed towards end of Q3 or beginning of Q4, including projects in Gurgaon and Greater Noida.
- Expected receipt of OCs for five Bangalore projects in subsequent quarters, enabling recognition of approximately INR 650 crore revenue and INR 150 crore PBT that was deferred in Q1.
Risks flagged
- Revenue recognition based on project completion creates margin volatility; higher sales today hurt P&L margins due to accelerated selling costs against deferred revenue recognition.
- The launch pipeline of ~8 million sq ft (INR 10,000 crore potential) is heavily concentrated in Q3-Q4, with management acknowledging some projects in Bangalore may be delayed, creating execution risk around meeting full-year sales targets.
- The first Mumbai project is exploratory at only 150,000 sq ft (phase one of 300,000 sq ft total), with limited operational track record in a market characterized by different competitive dynamics and higher land costs. Success depends on learning phase execution.
- With INR 1,706 crore cash on books, management faces pressure to deploy capital for land acquisition. However, land costs and opportunities have matured, reducing margin of safety compared to prior years. Calibrated deployment is needed to avoid value-destructive acquisitions.
Key quotes
- If we had included those [OC-delayed projects], we could recognize additional close over INR 650 crores with regard to these projects. Probably the net that we could have recognized, net in the sense PBT, would be over INR 150 crores.
- This INR 150 crores, what I mentioned was PBT, not the PER. The second is for all the new projects that we have been selling in the past, say, two years, we have guided last time that we have at the project level, the EBITDA margin is at 33%.
- As we start recognizing revenue from new projects in the upcoming quarters, we expect improvement in margins.
- In a typical, as you I'm sure you have seen all the P&Ls of real estate companies, particularly the ones who recognize revenue on a completion basis, an increase in sale in the pre-sales for the subsequent years are, in fact, detrimental to the P&L.
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