Sobha Ltd shares gained over 5 percent after the real estate major reported better operational performance during the first quarter of fiscal 2021 despite the coronavirus-induced nationwide lockdown. The stock gained as much as 5.67 percent to Rs 235.50 on the BSE. At 9:45 am, the shares traded 5.36 percent higher, quoting at Rs 234.80 apiece.

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The company reported Q1FY21 sales volume at 650,400 lakh square feet valued at Rs 488 crore, with a total average realisation of Rs 7,498 per square feet.

The company said that Bengaluru was amongst the least impacted metros from COVID-19 so far and has contributed 74 percent of sales volume during Q1FY21 along with other regions also contributing meaningfully.

“With more and more companies opting for work from home, inherent demand for better quality homes, low-interest rates and other benefits extended by the government, demand is likely to sustain in the coming quarters and organized players are expected to perform better. The level of inquiries from customers are now almost back to pre-COVID levels,” the company said in its Q1 business update to the exchanges.

“Despite 2 months of lockdown, disrupted demand outlook, complete washout of economic activities in the real estate sector, we are happy to announce that we were able to clock 70% of sales volume during Q1-21 as compared to Q4-20,” it said.

The company was also able to reduce our net debt and average interest cost of borrowing during Q1FY21. This was the second consecutive quarter when the company’s net debt had reduced, it added.

Jefferies believes that Sobha’s 1QFY21 pre-sales decline of 39 percent YoY to 0.65 million square feet is a good outcome for the lock-down quarter and has come in an industry where volumes could have been much worse.

“A push towards online channels and relatively good performance of the core Bangalore market helped drive sales. The blended realisation was flattish QoQ/YoY. Sobha would have gained market share in the largely unorganized property sector; and as such we see positive read-through from its performance for other listed companies such as Godrej Properties,” Jefferies said.

The ability to market real estate online and gain customer trust on project delivery during tough times is a key differentiating factor helping to accelerate market share gains, it said.

Jefferies has maintained a 'buy' rating on the stock with a target price of Rs 306 per share.

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