Sobha's operating margin swings to -12.61% after Q4FY26 profit
Sequential revenue fell 35.70% while expenses rose 8.65%, and other income supplied 75.11% of pre-tax profit.
Filed 20 Jul 2026, 17:16 IST · after market close · Sobha Ltd (SOBHA)
Key takeaways
- Consolidated revenue grew +50.03% YoY, outpacing expense growth of +44.96% and lifting operating margin by 3.28 percentage points.
- Operating margin fell 1.58 percentage points QoQ to 6.08% as expenses declined less than revenue.
- Other income accounted for 75.06% of pre-tax profit, while the stock was down -7.65% five sessions after the result.
Price around the results
Revenue growth outpaced costs on a year-on-year basis
Sobha's consolidated revenue grew +50.03% YoY, while expenses rose +44.96%, driving a +226.28% increase in operating profit and a +273.35% rise in net profit. Sequentially, revenue fell -35.70% and operating profit fell -48.93%, showing a sharp step-down from the Q4FY26 peak.
Operating margin remains volatile after the Q4FY26 peak
The YoY cost advantage expanded operating margin by 3.28 percentage points, but the sequential fall in revenue was steeper than the decline in expenses, narrowing margin by 1.58 percentage points. Margin has moved unevenly across the past five quarters, from 7.58% in Q4FY25 to 2.80%, 6.79%, 4.11%, 7.66% and now 6.08%. Among 145 Consumer Discretionary peers that have reported, Sobha's margin was 6.85 percentage points below the 12.93% median and ranked 23rd from the bottom.
Other income remains central to reported profit
Other income represented 75.06% of pre-tax profit, making reported earnings less dependent on operating profit than the headline net-profit growth suggests. The tax rate increased by 1.86 percentage points QoQ, although it was down 0.54 percentage points YoY; interest expense fell -26.87% QoQ but rose +3.68% YoY.
The initial market gain reversed over the following sessions
The stock opened with a +5.81% gap, but its same-day return was only +0.04%, followed by a -7.65% move after five sessions and -8.02% after 15 sessions. That five-session decline was larger than the stock's median absolute post-result move of 1.72% across eight results, although its history is evenly split between four rises and four falls.
Q1FY27 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q1FY27 | Q4FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹1,278 cr | ₹1,988 cr | -35.70% | +50.03% |
| Other income | ₹52 cr | ₹42 cr | +23.58% | +4.87% |
| Expenses | ₹1,200 cr | ₹1,836 cr | -34.60% | +44.96% |
| Operating profit | ₹78 cr | ₹152 cr | -48.93% | +226.28% |
| Operating margin (%) | 6.08% | 7.66% | — | — |
| Interest | ₹32 cr | ₹44 cr | -26.87% | +3.68% |
| Depreciation | ₹28 cr | ₹28 cr | -0.39% | +19.86% |
| Profit before tax | ₹69 cr | ₹122 cr | -43.23% | +270.62% |
| Tax | ₹18 cr | ₹30 cr | -38.90% | +263.42% |
| Net profit | ₹51 cr | ₹92 cr | -44.63% | +273.35% |
| EPS (₹) | ₹4.75 | ₹8.59 | -44.70% | +274.02% |
Operating margin of 6.08% compares with a Consumer Discretionary sector median of 12.93% across 145 peers that have reported Q1FY27.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | +0.04% | +0.25% |
| Next session | -2.04% | — |
| 5 sessions | -7.65% | -6.60% |
| 15 sessions | -8.02% | — |
Volume on the results session was 13.32× its 20-day average.
What to watch
- Whether operating margin recovers from 6.08% after the 1.58 percentage-point QoQ decline.
- Whether revenue continues to grow faster than expenses, as it did at +50.03% versus +44.96% YoY.
- Whether other income's 75.06% share of pre-tax profit decreases in the next quarter.