Sobha profit halves as higher interest costs offset a modest margin recovery
Revenue fell 31.30% year on year, while management cited ₹313.53 billion of sale potential from forthcoming launches.
Filed 19 Oct 2026, 20:47 IST · after market close · Sobha Ltd (SOBHA)
Key takeaways
- Consolidated net profit fell 54.56% year on year to Rs 32.96 cr as interest costs rose 24.54%.
- Operating margin improved 1.03 percentage points sequentially to 7.11% because expenses fell faster than revenue.
- Other income equalled 106.45% of pre-tax profit, making the reported profit mix dependent on non-operating income.
Price around the results
Profit fell despite a better operating margin
Sobha's consolidated revenue declined 31.30% year on year and 24.34% sequentially, while net profit dropped 54.56% year on year and 35.18% from Q1FY27. The operating margin nevertheless improved 0.32 percentage points year on year and 1.03 percentage points sequentially to 7.11%, as expenses fell slightly faster than revenue. The margin remains below the 7.66% recorded in Q4FY26.
Interest and tax diluted operating improvement
Interest expense rose 24.54% year on year and 24.97% sequentially, while depreciation increased 20.60% year on year and 11.46% sequentially. The tax rate also rose 3.16 percentage points year on year and 3.40 percentage points sequentially to 29.84%. Other income was 106.45% of pre-tax profit, so reported earnings included a substantial non-operating contribution.
Margin remains below the sector median
Sobha's 7.11% operating margin was 2.36 percentage points below the 9.47% median for the 18 Consumer Discretionary peers that had reported the quarter. It ranked seventh from the bottom among those companies. Across the available quarters, margin rose from 2.80% in Q1FY26 to 7.66% in Q4FY26, dipped to 6.08% in Q1FY27, and recovered to 7.11% in Q2FY27.
Management points to launches and booked revenue
Management said five projects measuring 7.92 million square feet were launched in H1 FY27. The company said forthcoming launches carry stated sale potential of ₹313.53 billion and that ₹220.41 billion of revenue from sold units is yet to be recognised. Management also stated that 50 projects are under development and projected project-level EBITDA margins of more than 30%.
No market reaction yet after the late filing
The consolidated results were filed after market close, so there was no immediate market reaction to report. In the eight prior result reactions, the stock rose four times and fell four times, with a median absolute move of 1.72%.
Q2FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹967 cr | ₹1,278 cr | -24.34% | -31.30% |
| Other income | ₹50 cr | ₹52 cr | -3.60% | -18.96% |
| Expenses | ₹898 cr | ₹1,200 cr | -25.17% | -31.53% |
| Operating profit | ₹69 cr | ₹78 cr | -11.57% | -28.14% |
| Operating margin (%) | 7.11% | 6.08% | — | — |
| Interest | ₹40 cr | ₹32 cr | +24.97% | +24.54% |
| Depreciation | ₹32 cr | ₹28 cr | +11.46% | +20.60% |
| Profit before tax | ₹47 cr | ₹69 cr | -32.03% | -52.51% |
| Tax | ₹14 cr | ₹18 cr | -23.30% | -46.89% |
| Net profit | ₹33 cr | ₹51 cr | -35.18% | -54.56% |
| EPS (₹) | ₹3.08 | ₹4.75 | -35.16% | -54.57% |
Operating margin of 7.11% compares with a Consumer Discretionary sector median of 9.47% across 18 peers that have reported Q2FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
Guidance & outlook
- Forthcoming launches have a stated sale potential of ₹313.53 billion.
- The company reports ₹220.41 billion of revenue to be recognized from sold units.
- The company projects a project-level EBITDA margin of more than 30%.
- Marginal cashflow from current and forthcoming projects is stated at ₹197.48 billion.
- The company has 50 projects under development, including forthcoming launches.
Expansion
- The company launched five projects measuring 7.92 million square feet in H1 FY27.
What to watch
- Whether operating margin improves from 7.11% toward the 9.47% sector median.
- Whether interest expense moderates from its 24.97% sequential increase.
- Progress on recognising the ₹220.41 billion of revenue from sold units.