The real estate sector is always in the focus due to the demand patterns shift across cities and price trends evolve. While concerns such as global uncertainty and job-related risks linger, brokerage house Nuvama Institutional Equities has identified one stock where it still sees meaningful upside potential.
The stock here in the focus is Sobha. It is a well-known real estate developer. The brokerage house, Nuvama has maintained a ‘Buy’ rating on the stock and set a target price of Rs 1,631. This translates to an upside potential of around 41% from current levels.
So, what is driving this outlook? Let’s take a look –
Nuvama on Sobha: A strong quarterly showing, but with some caution
The brokerage firm Nuvama in its report noted that Sobha’s Q4FY26 performance showed a mix of growth and moderation.
The report added, “Sobha’s Q4FY26 overall pre-sales came in at around Rs 2,040 crore (up 11% YoY, down 4% QoQ).”
Nuvama’s Buy Call on Sobha: 41% Upside Potential
BUY
Nuvama Institutional Equities
Key Growth Drivers
1
Record FY26 Pre-Sales: ₹8,140 cr (↑30% YoY) — best-ever annual performance
2
Strong Volume Growth: 5.5 msf sold (↑18.5% YoY) with company share reaching ₹6,710 cr (↑35% YoY)
3
Robust Launch Pipeline: 6 msf across 9 projects in FY26, including Mumbai market entry
4
Bengaluru Approvals Resolved: Earlier issues largely cleared, accelerating future launches
5
Pricing Power: Average realization of ₹14,675/sft (↑9% YoY) demonstrates strong demand
Regional Performance (FY26)
Bengaluru
₹4,480 cr
55% share
Kerala
10%
Kochi/Trivandrum
Q4FY26 Highlights
Pre-sales: ₹2,040 cr (↑11% YoY)
Avg Price: ₹15,268/sft (↑30% YoY)
New Launches: 3 projects (3.3 msf)
WACC: Increased to 12%
This means that while sales improved compared to the same period last year (year-on-year or YoY), there was a slight dip compared to the previous quarter (quarter-on-quarter or QoQ).
The company’s share in these sales stood at around Rs 1.630 crore, which saw a growth of 19% YoY, though it declined sequentially.
Nuvama on Sobha: FY26 turns into a record year
The brokerage report further noted, “the company ended FY26 with its best-ever annual pre-sales of Rs 8,140 crore (up 30% YoY).”
In terms of volumes, Sobha sold around 5.5 million square feet (msf) of space during the year, a 18.5% YoY increase. The company’s share of sales value also reached a record high of around Rs 67.1 billion, up 35% YoY.
Nuvama on Sobha: Expansion and launches drive momentum
One of the key drivers behind this growth has been the company’s strong focus on project launches and expansion into new regions.
The brokerage noted, “The company launched three projects spanning ~3.3msf during the quarter.”
For the full year, launches stood at approximately 6 million square feet across nine projects. This included the company’s entry into new markets such as Mumbai, which adds another layer of growth potential.
In addition to this, earlier approval-related issues in Bengaluru appear to have been largely resolved. This allows the company to accelerate its launch pipeline.
Nuvama on Sobha: Bengaluru leads and other regions gain traction
The largest contributor to Sobha’s sales is Bengaluru.
The city contributed around Rs 44.8 billion in pre-sales during FY26, This accounts for nearly 55% of the total, according to Nuvama’s report.
Apart from this, other regions are also played an increasingly important role.
For instance, the National Capital Region (NCR), including Greater Noida and Gurugram, contributed around 30% of total pre-sales.
Furthermore, Kerala added another 10% share. This is driven by projects in Kochi and Thiruvananthapuram.
Nuvama on Sobha: Pricing strength, but volumes show some softness
Another key trend visible in the data is the sharp rise in pricing.
The brokerage noted, “Average prices during Q4FY26 jumped 30% YoY (down 1% QoQ) to around Rs 15,268/sft.”
For the full year, average prices rose 9% YoY to around Rs 14,675 per square foot.
However, there is a flip side. New sales volumes during the quarter declined 14% YoY.
Nuvama on Sobha: Risks – Global factors and sentiment concerns
Nuvama report also has highlighted certain risks that could influence the sector.
It stated, “threat of job losses due to AI and the ongoing war have led to a decline in housing sales in the country and increased risk perception of realty stocks.”
What will drive the next move?
The brokerage believes that the company’s future trajectory will depend on both internal execution and external conditions.
It noted, “geopolitical issues and customer response to launches will determine the stock’s trajectory.”
The brokerage has also increased its Weighted Average Cost of Capital (WACC) from 10% to 12%.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.
