Sobha Developers Debt jumped on 46.6% in 2015 and Revenue surged on 12.3%

12-05-2015 • About Sobha Developers ($SOBHA) • By InTwits

Sobha Developers reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:

Sobha Developers has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.3%. At the same time it's a lot of higher than industry average of 5.6%.
CAPEX is quite volatile: 636 in FY2015, 1,197 in FY2014, 877 in FY2013, 1,021 in FY2012, 218 in FY2011
The company has highly profitable business model: ROIC is at 12.7%

Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Sobha Developers ($SOBHA) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	13,945	14,079	18,645	21,734	24,406	12.3%
EBITDA	3,659	4,731	5,610	6,174	6,173	-0.0%
Net Income	1,813	2,060	2,215	2,350	2,380	1.3%
Balance Sheet
Cash	179	415	573	801	1,411	76.3%
Short Term Debt	3,251	1,973	13,261	13,255	18,233	37.6%
Long Term Debt	21	244	526	789	2,355	198.6%
Cash flow
Capex	218	1,021	877	1,197	636	-46.8%
Ratios
Revenue growth	-54.9%	1.0%	32.4%	16.6%	12.3%
EBITDA growth	33.8%	29.3%	18.6%	10.1%	-0.0%
EBITDA Margin	26.2%	33.6%	30.1%	28.4%	25.3%	-3.1%
Net Income Margin	13.0%	14.6%	11.9%	10.8%	9.8%	-1.1%
CAPEX, % of revenue	1.6%	7.3%	4.7%	5.5%	2.6%	-2.9%
ROIC	12.4%	18.8%	16.7%	14.6%	12.7%	-1.9%
ROE	10.2%	10.7%	10.7%	10.6%	10.1%	-0.5%
Net Debt/EBITDA	0.8x	0.4x	2.4x	2.1x	3.1x	1.0x

Revenue and profitability

The company's Revenue surged on 12.3% in FY2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 3.2 pp from 6.1% to 9.3% in FY2015.

Net Income marign decreased slightly on 1.1 pp from 10.8% to 9.8% in FY2015.

Capital expenditures (CAPEX) and working capital investments

Sobha Developers's CAPEX/Revenue was 2.6% in FY2015. The company showed decline in CAPEX/Revenue of 4.6 pp from 7.3% in FY2012 to 2.6% in FY2015. It's average level of CAPEX/Revenue for the last three years was 4.3%.

Return on investment

The company operates at good ROIC (12.71%) while ROE is low (10.08%). ROIC decreased slightly on 1.9 pp from 14.6% to 12.7% in FY2015. ROE decreased slightly on 0.54 pp from 10.6% to 10.1% in FY2015.

Leverage (Debt)

Company's Net Debt / EBITDA is 3.1x and Debt / EBITDA is 3.3x. Net Debt / EBITDA jumped on 1.0x from 2.1x to 3.1x in FY2015. Debt jumped on 46.6% in FY2015 while cash jumped on 76.3% in FY2015.

Appendix 1: Peers in Realty

Below we provide Sobha Developers benchmarking against other companies in Realty industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.

Top companies by Revenue growth, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Sunteck Realty ($SUNTECK)	-94.4%	-16.0%	77.7%	2,963.6%
Nitesh Estates ($NITESHEST)	-63.3%	-6.3%	-28.7%	259.1%
The Phoenix Mills ($PHOENIXLTD)	-89.4%	87.7%	19.1%	208.3%
Poddar Developers ($PODDARDEV)		-18.4%	63.9%	152.9%	56.0%
Lancor Holdings ($LANCORHOL)		-47.4%	-23.9%	74.0%	10.5%
Median (33 companies)	-11.2%	-1.6%	3.4%	-4.5%	34.0%
Sobha Developers ($SOBHA)		1.0%	32.4%	16.6%	12.3%

Top companies by Gross margin, %


Top	FY2011	FY2012	FY2013	FY2014	FY2015
Godrej Properties ($GODREJPROP)	28.2%	24.9%	33.3%	28.9%	19.4%
Median (1 company)	28.2%	24.9%	33.3%	28.9%	19.4%

Top companies by EBITDA margin, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Housing Development & Infrastructure ($HDIL)	83.7%	75.8%	40.6%	102.5%
Hubtown ($HUBTOWN)	51.6%	53.3%	72.4%	67.6%
Oberoi Realty ($OBEROIRLTY)	58.7%	59.3%	58.9%	54.5%	56.4%
Pvp Ventures ($PVP)	-644.3%		73.2%	51.1%
The Phoenix Mills ($PHOENIXLTD)	71.8%	54.7%	56.2%	46.9%
Median (33 companies)	23.3%	19.4%	13.4%	19.8%	31.9%
Sobha Developers ($SOBHA)	26.2%	33.6%	30.1%	28.4%	25.3%

Top companies by CAPEX/Revenue, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
The Phoenix Mills ($PHOENIXLTD)	138.3%	168.3%	108.0%	107.1%
Prestige Estates Projects ($PRESTIGE)	23.3%	37.7%	30.2%	18.8%
Brigade Enterprises ($BRIGADE)	42.6%	45.7%	10.7%	17.0%
Parsvnath Developers ($PARSVNATH)	19.9%	15.9%		11.6%
Unitech ($UNITECH)	9.8%	4.6%	12.7%	10.6%
Median (29 companies)	5.5%	4.7%	2.3%	3.5%	1.2%
Sobha Developers ($SOBHA)	1.6%	7.3%	4.7%	5.5%	2.6%

Top companies by ROIC, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Sunteck Realty ($SUNTECK)	0.5%	0.4%	0.4%	24.5%
Lancor Holdings ($LANCORHOL)	38.2%	18.0%	11.6%	19.5%	17.7%
Poddar Developers ($PODDARDEV)	4.1%	3.9%	2.6%	12.9%	19.1%
Puravankara Projects ($PURVA)	11.2%	13.3%	17.0%	12.3%
The Phoenix Mills ($PHOENIXLTD)	4.5%	4.9%	5.4%	11.1%
Median (50 companies)	9.2%	5.7%	4.6%	5.6%	12.2%
Sobha Developers ($SOBHA)	12.4%	18.8%	16.7%	14.6%	12.7%

Top companies by Net Debt / EBITDA


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Unitech ($UNITECH)	5.5x	13.1x	14.4x	28.0x
Vascon Engineers ($VASCONEQ)	2.8x	8.4x	11.2x	25.9x
Peninsula Land ($PENINLAND)	2.2x	5.5x		24.0x
Parsvnath Developers ($PARSVNATH)	4.5x	5.1x	4.7x	14.6x
D B Realty ($DBREALTY)	1.1x	13.2x	135.4x	14.0x
Median (39 companies)	4.2x	5.3x	5.1x	5.0x	2.8x
Sobha Developers ($SOBHA)	0.8x	0.4x	2.4x	2.1x	3.1x

Sobha Developers stock price chart

Sobha Developers financials

mln.	FY2010	FY2011	FY2012

Revenue	30,898	13,945	14,079
EBITDA	2,736	3,659	4,731
Net income	1,341	1,813	2,060
CAPEX	139.4	217.5	1,021
Debt	14,889	3,272	2,218
Cash	459.7	179.1	414.5

About Sobha Developers

Sobha Limited constructs and develops residential and commercial projects primarily in India. Its residential projects include luxury and super luxury apartments, semi-luxury apartments, villas, row houses, presidential apartments, and plotted developments; and contractual projects for corporate entities, including offices, convention centers, software development blocks, multiplex theatres, hostel facilities, hotels, guest houses, food courts, restaurants, research centers, club houses, and factory buildings. The company also manufactures doors and door frames; fitted and loose furniture for hotels and serviced apartments; panelings, partitions, discussion tables, office workstations, reception desks, lift claddings, etc.; and modular kitchens, wardrobes, sofas, dining tables, exclusive chairs, etc. In addition, it undertakes contracts for corporate interiors for offices and hospitals; manufactures wood and wood-based products; manufactures and markets aluminum doors, windows, structural glazing, aluminum composite panels, and stainless steel cladding products; and undertakes other architectural metal works. Further, it manufactures concrete products, such as concrete blocks, pavers, kerbs, water drainage channels, paving slabs, and related landscape products, as well as mattresses under the Restoplus brand. The company was formerly known as Sobha Developers Limited and changed its name to Sobha Limited in August 2014. Sobha Limited was founded in 1995 and is headquartered in Bengaluru, India.