In Wednesday’s intraday trade, Sobha shares tumbled 5.4% to Rs 491.40 on the BSE after the real estate company announced that Income Tax Department’s search was carried out at the registered office and the company’s other premises.

At 12:12 pm, Sobha traded 5.2% lower at Rs 492.60 on the BSE, a 52-week low of Rs 480.35, on June 20, 2022. The S&P BSE Sensex was high by 0.13% at 58,152.

Sobha stated that being a responsible company, all the concerned employees/staff fully support the officials. 

The stock declined 15% in the past month, associated with a 2.6% fall in the S&P BSE Sensex. Further, it tanked 30% against the 1.5% decline in the benchmark index in the six months.

For Q3FY23, Sobha’s net profit halved, hit by higher land acquisition charges. The company’s combined net profit tumbled 48% to Rs 31.8 crore from Rs 61.4 crore the year ago. Aggregate expenses surged 49% to Rs 779 crore over the earlier year quarter.

Sobha functions majorly outside Bengaluru, with about 67% of its total sales coming from the region. It also operates in nine cities comprising Pune, Delhi NCR, and Chennai.

A significant upsurge in the scale and cash flow diversification, liquidity improvement, and credit metrics could be positive for the firm’s ratings. Less demand for new projects results in a higher-than-expected focus on cash flows in selected projects. Besides, a cash flow deficit or deviation from the land acquisition strategy will result in higher debt and/or the net debt/net working capital surpassing 0.65x continually. It will lead to a pessimistic rating action, Ind-Ra said in Shoba’s rating action.