Sobha Ltd Q2 FY27 Earnings Call: Guides 50% PAT Growth, Record H1 Sales Up 47%

Sobha Ltd held its Q2 FY27 earnings call on October 19, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Record H1 Sales, But Q2 P&L Soft on Recognition Mix

• Q2 FY 2026-2027 total income of Rs.1,017 Cr — vs Rs.1,469 Cr in the prior-year quarter; real estate revenue contributed Rs.749 Cr and contractual/manufacturing/retail operations Rs.225 Cr.
• Q2 EBITDA of Rs.119 Cr at an 11% margin and PAT of Rs.33 Cr; H1 FY 2026-2027 total income stood at Rs.2,347 Cr, EBITDA Rs.249 Cr, PAT Rs.84 Cr.
• Record H1 FY 2026-2027 sales of Rs.5,862 Cr (+47.2% YoY) — 3.76 million sq ft across 2,260 units (+30.4%); Sobha's share of sales value hit a record Rs.4,874 Cr.
• Q2 sales of Rs.2,206 Cr (+16% YoY) — second-highest quarterly sales ever, across 1.42 million sq ft / 828 units.
• Realizations improved to Rs.15,522/sq ft in Q2 — vs Rs.13,648 in Q2 FY 2025-2026 (+13.7%); H1 FY 2026-2027 realization at Rs.15,604/sq ft vs Rs.14,028 in H1 FY 2025-2026.
• Q2 gross margin at ~48% (a recent-quarter high per the analyst); management stated the remaining ~Rs.22,000 Cr of revenue to be recognized carries strong EBITDA margins.
• Q2 margins appear lower as lower-margin projects are recognized — management expects margins to improve significantly as projects under completion/handover are recognized.

Bangalore and NCR Dominate; Demand Steady, Softness Micro-Market Only

• Bangalore led H1 FY 2026-2027 sales at Rs.3,385 Cr (~58%) — NCR Rs.1,974 Cr (~34%), Kerala Rs.357 Cr (~6%), other cities 2.5%.
• Healthy Q2 sustenance sales from Q1 launches — Sobha One World and Sobha Neopolis (Bangalore), Sobha Crescent and Aranya (Gurgaon).
• Demand described as steady across key markets — NCR, Bangalore and a small Mumbai presence; softness limited to specific micro-markets/projects rather than broad-based.
• Sobha Rivana (Noida) started slower — launched in Q1 amid the onset of war-related geopolitics, but sustenance demand and walk-ins are robust; management characterized it as an end-user-driven market and expects steady sales through project completion.
• Ticket sizes above Rs.5 Cr contributed 36% of H1 FY 2026-2027 sales — though only 26.2% in Q2 alone; units above Rs.5 Cr were predominantly from Gurgaon (NCR), with one project each in Bangalore and Mumbai.
• Higher ticket-size spikes are quarter-specific, not structural — per management commentary; for H2 FY 2026-2027 launches, over 70% of total inventory lies in the Rs.2-5 Cr band.
• Hoskote project cumulative sales crossed Rs.2,500 Cr — of Rs.7,500 Cr total project value; one more tower launched in Q2, taking released inventory to almost 65% of total.

Rs.18,000 Cr H2 Pipeline; Land Spend Front-Loaded

• ~8 projects / ~12 million sq ft lined up for H2 FY 2026-2027 — at ~Rs.15,000/sq ft, translating to a GDV of ~Rs.18,000 Cr (3 in Bangalore; 1 each in Hyderabad, Chennai, Gurgaon, Greater Noida, Thrissur).
• Two large Bangalore launches planned in H2 FY 2026-2027 — one with GDV >Rs.3,000 Cr (similar to or slightly lower than Sobha One World) and a second at ~Rs.2,500 Cr+ GDV toward the end of FY 2026-2027.
• Management is confident of at least 2-3 launches in Q3 FY 2026-2027 — roughly half in Q3 and half in Q4; approvals are highly time-sensitive and any slip could push launches into Q4 FY 2026-2027; management may also hold launches despite approvals for better preparation.
• H1 FY 2026-2027 saw five launches aggregating 7.91 million sq ft — across Bangalore, Gurgaon and Calicut, with estimated sales potential of ~Rs.11,200 Cr; Q2 added Sobha Boulevard (plotted, Mysore) and Sobha Bellevue (Calicut high-rise, 4.3 acres, 298 homes, 0.83 million sq ft).
• H1 FY 2026-2027 land cash outgo of ~Rs.987 Cr — ~30% settled old dues on existing projects (now fully complete), ~25% consolidated existing lands/landowner payouts, balance toward 3 new parcels in Bangalore, 1 in Gurgaon, 1 in Mumbai; newly acquired lands take ~1.5 years to reach the project pipeline at approval stage.
• GDV of H1 FY 2026-2027 acquisitions not disclosed — management will share the estimate separately; the analyst pegged it at ~Rs.9,000-10,000 Cr.
• Launch pipeline stands at 20.42 million sq ft across 18 projects — with unsold inventory of ~15 million sq ft as of September 30, 2026.

15% EBITDA Guidance Is H2-Only; 50% PAT Growth Target

• Management clarified the 15% EBITDA margin guidance applies to H2 FY 2026-2027 — not the full year.
• At least 50% PAT growth guided for FY 2026-2027 over FY 2025-2026 — with FY 2027-2028 expected to be even better; management reaffirmed that P&L improves from Q3 FY 2026-2027 onwards and said it is on track.
• Rs.22,040 Cr of revenue from already-sold units awaits recognition — as of Q2 FY 2026-2027 end.
• Other unallocable expenses of Rs.977.57 million in Q2 — ~10% of net revenue of ~Rs.9.6 billion; MD Jagdish Nangineni described it as largely fixed overheads, inflationary but growing slightly slower than company growth, plus a component proportional to sales.
• ~Rs.190 Cr of unallocable expenses incurred in H1 FY 2026-2027 — vs ~Rs.200 Cr for full FY 2025-2026; the analyst's question on whether ~10% corporate overhead dilutes ~30% project-level EBITDA to ~20% was left unanswered — management committed to revert.
• Joint development vs owned mix: ~50% own / ~50% JD — assuming a typical ~35% landowner share on JD projects (~17.5% effective), Sobha's aggregate share of overall sale/inventory is ~82-85%.

Net Cash Position Sustained; Record Collections

• Q2 FY 2026-2027 collections of Rs.2,084 Cr — highest-ever cash inflows, with net operating cash flow of Rs.422 Cr for the quarter; H1 FY 2026-2027 operational cash flow positive at Rs.755 Cr.
• Net cash position of Rs.322 Cr with borrowing cost of 7.75% — management remains focused on sustaining zero net debt throughout FY 2026-2027.
• Balance sheet as of 30 September 2026 — gross debt Rs.1,505 Cr against cash and equivalents of Rs.1,827 Cr; debt-to-equity of negative 0.07.
• Q2 cash deployment — real estate project outflows Rs.826 Cr, sales and marketing Rs.103 Cr, land payments Rs.617 Cr in Q2 (Rs.987 Cr for H1 FY 2026-2027); net cash movement was negative Rs.337 Cr in Q2 and negative Rs.486 Cr in H1 FY 2026-2027.
• Projected project-level marginal cash flow of Rs.12,517 Cr — from receivables plus unsold inventory sale value of Rs.31,814 Cr against estimated remaining project cost of Rs.1,927 Cr as of 30 September 2026; Rs.19,748 Cr including forthcoming projects.

Ancillary Steady; Delivery Plan Back-Half Loaded

• Contracts, manufacturing and retail generated ~Rs.225 Cr in Q2 FY 2026-2027 (+31% QoQ) — external order book at Rs.540 Cr; commercial rental portfolio contributed Rs.24 Cr; management expects steady performance with scope for marginal growth.
• Acquired a small fire-and-safety business from Sobha Projects and Trade Limited (SPTL) — ~70% of its business is currently for Sobha itself; order book ~Rs.180 Cr (70% Sobha-related) and annual revenue run-rate ~Rs.60-65 Cr as of Q2 FY 2026-2027; no capex required, only potential working capital funding.
• Acquisition rationale is strategic and financial — better coordination and faster delivery, cost reduction from a GST benefit currently being lost, and procurement scale synergies.
• FY 2026-2027 delivery plan of ~6 million sq ft — ~2.56 million sq ft already completed in H1; ~3.5 million sq ft planned for H2 FY 2026-2027.
• On the analyst's ~Rs.3,000-4,000 Cr H2 revenue estimate — management called it a ballpark number but cautioned that completions do not necessarily translate into handovers (the revenue recognition trigger) and company share must be adjusted.
• Macro caution flagged on interest rate increases, geopolitics and AI — but leading indicators (inquiries, marketing-office visits) remain steady and sustained sales are good; any positive catalysts could make things even better.
• Chennai presence remains very limited — one project launch planned in H2 FY 2026-2027 with Sobha Arkar just completed; approvals have been "quite swift" even after the new government came in — no delays experienced, business as usual.