Sobha Limited Announces ₹2,000 Crore Rights Issue at ₹1,651 Per Share

Sobha Limited, a renowned real estate developer based in Bengaluru, has unveiled plans to raise ₹2,000 crore through a rights issue. The rights issue price has been set at ₹1,651 per equity share, representing a 25% discount to the current market price. This strategic move aims to bolster the company’s financial stability and support its ongoing and future projects.

The rights issue will offer eligible shareholders six rights equity shares for every 47 fully paid-up equity shares they hold. This offer will open on June 28, 2024, and close on July 4, 2024. The stock of Sobha Limited, with a face value of ₹10, closed at ₹2,063.9 on June 12, 2024, reflecting a slight decrease of 0.11% on the BSE.

Sobha Limited has faced mixed financial results recently, reflecting the challenging environment in the real estate market. The company reported a net profit of ₹7 crore for the quarter ending March 31, 2024, an 85% decrease year-on-year. This significant drop in profit was due to subdued topline and operating performance. Despite the profit decline, revenue from operations grew by 37% year-on-year, reaching ₹763 crore.

However, total income fell by 36% year-on-year to ₹791.25 crore, down from ₹1,240.14 crore. This figure missed Bloomberg’s estimates, which had forecasted a profit of ₹52.1 crore and revenue of ₹1,180.8 crore for the quarter. Consolidated EBITDA also declined by 46.5% year-on-year to ₹62.1 crore, significantly lower than Bloomberg’s estimate of ₹143.6 crore.

The rights issue is a strategic initiative by Sobha Limited to strengthen its capital base and fund ongoing and future projects. The 25% discount on the rights issue is designed to make the offer attractive to existing shareholders, encouraging their participation and support.

Sobha Limited’s ₹2,000 crore rights issue at a 25% discount underscores the company’s efforts to enhance its financial resilience and maintain its growth trajectory in the competitive real estate market. Despite recent challenges in profitability and income, the company is leveraging this rights issue to secure necessary funding for its ambitious projects and operational needs. By offering a significant discount and structuring the rights issue to benefit existing shareholders, Sobha Limited aims to maintain investor confidence and drive forward its development plans.

Sobha Limited’s decision to launch this rights issue highlights the company's proactive approach to addressing financial challenges and seizing opportunities for growth. The funds raised will be pivotal in supporting Sobha's expansive real estate ventures, ensuring the company remains a key player in the industry.