Sobha Ltd aims Rs 10,000 crore increase in equity capital over next 5 years
Sobha Group, plans to increase its equity capital to Rs 10,000 crore over five years to support growth, including expansion into new markets, with an initial target of Rs 2,000 crore through a rights issue this fiscal year, said as disclosed by a senior company official.
After the Rs 2,000 crore rights issue, the company’s equity base will increase to Rs 4,500 crore.
“Equity is crucial for this business, given the cyclical nature of the real estate industry. We are very cautious and maintain discipline when it comes to debt. We will not allow the debt to exceed 45% without a corresponding 50% equity. Sobha will primarily focus on residential projects, comprising around 85 to 90% of our portfolio,” said PNC Menon, founder, Sobha Group.
Earlier this year, the board of Sobha Ltd approved raising Rs 2,000 crore through a rights issue to increase the equity of the company and fund the growth.
Sobha is also targeting over 5 times growth in its sales to Rs 30,000 crore over the next four years driven by new launches and its foray into the Mumbai market.
It plans to have at least 50 million sq ft of projects under development and in the pipeline over the next four years across major cities such as Mumbai, Bangalore, Pune, Chennai, Kerala, Hyderabad, and Ahmedabad. For the planned development, the firm intends to have Rs 15,000 crore worth of land under its umbrella.
“Mumbai is one of the key markets for us and we are targeting a small percentage of them as potential buyers (for our projects in the city). The potential
