Sobha FY26: Record Presales, Net Cash Balance Sheet, and a Launch-Heavy FY27 Setup

Sobha closed FY26 with its strongest presales on record and a materially strengthened balance sheet. Real estate sales value for FY26 came in at INR 8,136 crores, supported by an average realization of INR 14,675 per square feet versus INR 13,412 last year, as stated by management on the earnings call. Financials also improved on the headline line items. Consolidated total income was INR 5,383.8 crores (up 29.3 percent year-on-year), EBITDA was INR 503.3 crores (9.3 percent margin), and PAT was INR 193.4 crores (3.6 percent margin).

Cash generation remained a core highlight. Total operational cash inflow rose to INR 7,798.5 crores in FY26 (up 26 percent), while net operational cashflow increased to INR 1,636.7 crores (up 39 percent). The company ended the year in a net cash position, with gross debt of INR 1,002 crores and cash and cash equivalents of INR 1,802 crores, resulting in negative net debt of INR 800 crores.

Where FY26 sales came from

The sales mix stayed concentrated in the company’s two largest markets. In FY26, Bangalore generated sales value of INR 4,478 crores (55 percent contribution), while NCR contributed INR 2,455 crores (30 percent). Kerala delivered INR 808 crores (10 percent), and other cities added INR 396 crores (5 percent). Management stated that Bangalore and NCR together contributed about 85 percent of annual sales.

In Q4 FY26, the company reported sales value of INR 2,039 crores, up 11 percent year-on-year even though sales area fell to 1.34 million square feet (down 15 percent). This disconnect was consistent with the reported realization improvement, with FY26 realization at INR 14,675 per square feet.

Launches and inventory: setting up FY27

Sobha launched 6.04 million square feet during FY26. Management acknowledged that some planned launches were delayed due to multiple factors, both external and internal. Even with that slippage, the company entered FY27 with a large pipeline.

The investor presentation disclosed total inventory visibility of 31.20 million square feet with an estimated sales value of INR 44,195 crores. This includes completed inventory (0.24 million sft), ongoing released inventory (7.75 million sft), ongoing unreleased inventory (2.54 million sft), and forthcoming inventory of 20.67 million sft (including 0.60 million sft commercial).

Two projects became key reference points in Q4 and early FY27 discussions:

SOBHA Rivana, Greater Noida. The presentation describes Rivana as a 2,572,523 sft project with potential sale value of INR 390 crores, offering 1,364 homes. On the call, management clarified that Phase 1 had 684 units and that about 25 percent of launched inventory was sold in the first few weeks. Management attributed the launch outcome partly to the late-March timing and a shorter preparation window between RERA and the launch.

SOBHA Crescent Phase 1, Gurgaon. Management stated the project was launched in April 2026 and has received good response, with about 50 percent sold shortly after launch. They also quantified presales from Crescent at about INR 1,100 crores at the time of the call.

For FY27, management guided to launching close to 10 million square feet, with key launches across Bangalore, Gurgaon, Hyderabad, Thrissur, and Pune. The broader pipeline of 20.67 million square feet is expected to be launched over the next 6 to 8 quarters, with about 10 million square feet targeted within FY27.

Margins: the gap between presales strength and reported profitability

Despite the strong top-line growth, reported profitability remained moderate. FY26 EBITDA margin was 9.3 percent and PAT margin 3.6 percent. Management linked this to the timing of revenue recognition and the receipt of occupancy/completion certificates. Q4 FY26 saw a meaningful step up in revenue recognition compared with Q3, which management said was aided by clearances that were delayed in the prior quarter.

Management also gave specific forward commentary on margin trajectory tied to the revenue yet to be recognized. The investor presentation states balance revenue yet to be recognized from sales done till 31 March 2026 was INR 18,647 crores. On the call, management said the unrecognized real estate revenue pool is expected to deliver project level EBITDA margin of at least 30 percent plus, and that projects nearing completion and expected to be recognized in the next 12 months are likely to deliver margins in the 24 to 26 percent range. They expect profitability improvement to become more visible through FY27, with a stronger tilt toward the end of Q3 and Q4.

Cashflow also provides context on how the company is investing behind the growth plan. FY26 sales and marketing cash outflow increased to INR 303 crores from INR 165 crores in FY25. Net land payments were INR 1,160.3 crores for FY26. In Q&A, management indicated that FY27 land and business development spend could be similar, around INR 1,100 to 1,200 crores.

Balance sheet and annuity platform

The balance sheet remained liquid. As of 31 March 2026, gross debt was INR 1,002 crores and cash equivalents were INR 1,802 crores, translating into negative net debt of INR 800 crores. Finance expenses in the P and L fell to INR 137.4 crores in FY26 from INR 195.6 crores in FY25, supporting the improvement in PBT and PAT.

On the annuity side, the presentation disclosed a commercial portfolio with operating assets (SOBHA City Mall, Thrissur and 1 SOBHA, Bangalore) and stated that NOI from the operating commercial portfolio in FY26 was INR 52.2 crores. In the call, management discussed rental strategy as an important internal discussion but clarified that no immediate new rental projects are being developed right away. They added that there is clear visibility of adding about 2.0 to 2.5 million square feet over the coming years on land already available in Hoskote and Gurgaon.

What to watch next

Sobha’s FY26 narrative is straightforward. Presales and collections were strong, leverage reduced further into a net cash position, and the launch pipeline for FY27 is being positioned as the next leg of growth. Management reiterated an expectation of about 30 percent presales growth in FY27, similar to FY26.

The swing factor is the conversion of presales and backlog into reported margins. Management’s own markers are clear: better revenue recognition cadence as completions come through, and higher margin profiles in projects expected to be recognized over the next 12 months. Investors will likely track launch timing, approvals, and the pace at which occupancy and completion certificates translate into revenue and margin expansion.