You are right that Sobha, the south based realty company, has been consistently falling in share price. In fact, on Nov 13, Sobha actually touched a 52-week low when the price touched Rs.402. This fall was largely on the back of very weak results declared by the company for the September quarter. For the September 2019 quarter, Sobha’s profit before tax (PBT) grew by just 4% to Rs.187 crore, one of the weakest growths seen in recent times. In addition, the EBITDA (earnings before interest, tax, depreciation and amortisation) margin remained static at 23%. The total sales income from core operation also increased by 19% to Rs.784 crore for the quarter.

The company had a major challenge on the cash flow front and also the debt front. Sobha’s operational cash flows (OCFs) turned negative for the first time in the last 5 years due to RERA-linked issues. This was also due to weak collections in residential segment. In addition, the net debt levels of the company increased to around Rs.3,000 crore with net debt/equity ratio at 1.29x. The stock is still on the buy radar of most brokers but ideally you should now stick to names like DLF and Prestige Estates where the visibility could be much better for the stocks.