Nuvama Institutional Equities has maintained a “Buy” rating on Sobha Limited with a target price of ₹1,631, suggesting a significant 41% upside from current levels.
While Q4FY26 saw a 14% year-on-year drop in sales volume, the brokerage remains bullish due to record-breaking annual performance and a strategic shift toward premium pricing and new market entries.
1. Record-Breaking FY26 Performance
Despite quarterly fluctuations, the full financial year 2026 was a landmark period for the developer.
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Best-Ever Pre-sales: Sobha ended the year with ₹8,140 crore in pre-sales, a 30% YoY increase.
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Company Share: The company’s own share of these sales hit a record ₹6,710 crore (up 35% YoY).
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Total Volume: During the year, Sobha sold 5.5 million square feet (msf), marking an 18.5% growth in annual volume.
2. The Pricing Power Factor
The primary reason Nuvama isn’t worried about the 14% dip in Q4 volumes is the massive jump in realization per square foot.
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Q4 Price Jump: Average prices in Q4FY26 surged 30% YoY to ₹15,268/sft.
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Annual Trend: For the full year, average prices rose 9% to ₹14,675/sft.
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The Strategy: Sobha is successfully moving toward high-value, premium inventory. Even if they sell slightly fewer units, the higher price per unit is significantly boosting the total sales value and potential margins.
3. Strong Launch Pipeline and Regional Dominance
Sobha’s growth is anchored by its stronghold in Bengaluru and aggressive expansion into high-growth markets like Mumbai and NCR.
| Region | FY26 Pre-Sales Contribution | Strategic Importance |
| Bengaluru | 55% (₹4,480 cr) | Core market; earlier approval issues are now resolved. |
| NCR | 30% | Strong traction in Gurugram and Greater Noida. |
| Kerala | 10% | Driven by premium projects in Kochi and Trivandrum. |
| Mumbai | New Entry | A key “layer of growth” expected to contribute in FY27. |
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Launch Momentum: The company launched 6 msf across nine projects in FY26. Three of these (3.3 msf) were launched in the final quarter alone, providing a strong inventory “tail” for the coming year.
4. Key Risks and Macro Headwinds
Nuvama highlights that while the internal execution is strong, the real estate sector faces external pressures:
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Geopolitical Uncertainty: The ongoing West Asia conflict has increased risk perception for realty stocks.
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AI & Employment: The threat of job losses due to AI has led to a slight decline in overall housing sales sentiment across India.
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Cost of Capital: Reflecting these risks, Nuvama has increased the Weighted Average Cost of Capital (WACC) for Sobha from 10% to 12%.
Summary of Nuvama’s Buy Call
| Metric | Detail |
| Current Price | ₹1,156 |
| Target Price | ₹1,631 |
| Upside Potential | 41% |
| Key Trigger | Acceleration of the launch pipeline and entry into Mumbai. |
The Bottom Line: Sobha is successfully pivoting from a volume-led player to a value-led player. With Bengaluru approvals back on track and a premium launch pipeline ready, Nuvama views the recent volume softness as a temporary phase in a much larger growth story.
