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
- Sobha's consolidated operating margin fell 45.97 percentage points sequentially to -12.61% as revenue fell 35.70% while expenses rose 8.65%.
- Revenue grew 50.03% year on year, but expenses grew 51.22%, leaving the operating margin 0.89 percentage points below Q1FY26.
- Net profit rose 273.35% year on year to Rs 50.85 cr, but other income represented 75.11% of pre-tax profit.
Price around the results
A sharp reversal from Q4FY26
Sobha's consolidated operating margin moved from 33.36% in Q4FY26 to -12.61% in Q1FY27 as revenue declined 35.70% sequentially. Expenses rose 8.65% despite the lower revenue base, producing an operating loss of Rs 161.16 cr. Pre-tax profit and net profit consequently fell 43.17% and 44.63% sequentially.
Costs outpaced growth even year on year
The year-on-year revenue increase of 50.03% was marginally exceeded by a 51.22% rise in expenses, narrowing the operating margin by 0.89 percentage points. Lower sequential interest expense, down 26.87%, did not offset the operating loss. The tax rate rose 1.84 percentage points sequentially, while the 0.59-point year-on-year decline provided only a limited benefit to reported profit.
Margin path remains highly volatile
The operating margin improved from -56.43% in Q3FY26 to 33.36% in Q4FY26 before falling back to -12.61% in Q1FY27, making the recent trend one of sharp swings rather than a steady recovery. Sobha's margin was 28.75 percentage points below the 16.14% median for the 22 Consumer Discretionary peers that had reported, placing it lowest among them. Profit quality also warrants attention because other income accounted for 75.11% of pre-tax profit.
The initial market response was muted
The stock closed 0.04% higher on the first reaction day after opening with a 5.81% gap, then fell 2.04% the following day. The second-day decline was larger than the stock's 1.72% median absolute move after its last eight results, although its history was evenly split between four rises and four declines.
Q1FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q1FY27 | Q4FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹1,278 cr | ₹1,988 cr | -35.70% | +50.03% |
| Other income | ₹52 cr | ₹42 cr | +23.59% | +5.15% |
| Expenses | ₹1,439 cr | ₹1,325 cr | +8.65% | +51.22% |
| Operating profit | ₹-161 cr | ₹663 cr | — | -61.34% |
| Operating margin (%) | -12.61% | 33.36% | — | — |
| 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 | -43.17% | +271.37% |
| 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 -12.61% compares with a Consumer Discretionary sector median of 16.14% across 22 peers that have reported Q1FY27.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | +0.04% | +0.25% |
| Next session | -2.04% | — |
Volume on the results session was 13.32× its 20-day average.
What to watch
- Whether consolidated operating margin recovers from -12.61% after the 45.97-point sequential drop.
- Whether expenses continue to grow faster than revenue, after +51.22% versus +50.03% year on year.
- Whether other income's 75.11% share of pre-tax profit remains elevated.