2021-08-02 09:54:10
*Kolte-Patil Developers Ltd*
*Kotle-Patil Developers Ltd (KPDL) is Pune based leading and reputed real estate developer with 3 decades of presence in real estate sector. Over the years, it has delivered 20+ million Sq ft (msf) of projects across Pune, Mumbai and Bengaluru. Currently it has 29 msf of projects under execution, approvals, land bank and development management agreement (DMA). Going forward, the company has very ambitious target to reach 5 msf of pre sales volume by FY24 from 2.08 msf of sales volume in FY21. With right mix of projects which include society redevelopment, DM profit sharing and JD models along with outright sales, KPDL has focused on asset light model and maintaining a healthy balance sheet with net debt/equity ratio below 0.5 with decent RoCE (14-24%), EBITDA margins (20%+) and PAT margins (10%+).*
*Resilient H2FY21 performance with Robust collections and sales:* During H2FY21 KPDL delivered resilient performance with ~38.2% of Revenue growth to ₹4,863 mn post a very subdued business in H1FY21 due to countrywide lockdown. Its H2FY21 EBITDA grew by ~13x to ₹844mn, while EBITDA margins stood at 17.4%. Its H2FY21 net profits stood at ₹468mn. During FY21, KPDL witnessed robust collections to the tune of ₹11.3bn which resulted into ₹1.24bn net debt reduction despite final tranche payment of ₹810mn to ICICI Venture for 50% stake buyout in Life Republic. FY21 sales bookings of 2.08 msf (sales value ₹12bn) also exceeded its guidance of 1.8 msf by 15.6%. For FY22, KPDL target ~3msf of sales despite slower approvals and launches in Q1FY22. Given the current pipeline of projects(~8 in Mumbai, ~15-16 in Pune and 3 in Bengaluru), Company is confident of achieving ~5msf sales value with profitability level of ~₹3-4bn, while its average RoCE is expected to improve from ~14% to 24% in FY24.
*Diversifying geographical presence with growing share of Mumbai and Bengaluru market:* KPDL is no more concentrated to only Pune market and its contribution from projects in Mumbai and Bengaluru expanded to ~ ₹3bn (25% of FY21 sales value of ₹12bn). To diversify the business portfolio further KPDL launched Evara project (Borivali) in Q3FY21 and sold 54 units (75% of inventory) till Mar’21. With encouraging traction, recently it also launched 2 more projects in Mumbai i.e. Verve at Goregaon and Vaayu at Dahisar. The company expects its sales contribution from Mumbai to double in FY22 (FY21- ₹1.8bn) on the back of redevelopment projects Evara, Verve, Vaayu (topline potential ₹10bn) and the balance from ready-to-move-in inventory in Jai Vijay project.
*Upcoming projects across 3 cities with saleable area of ~7.2 msf and topline potential of ₹57bn:* Driven by improvement across the three geographies of Pune, Bengaluru and Mumbai, the company signed 3 new projects (Baner, Moshi, Wagholi) with a combined saleable area of 2.2 msf in Pune under capital light models with expected total topline of ₹15bn and KPDL’share of PBT of ₹2.2bn. It also signed 2 new projects with a combined saleable area of 1.3 msf in Pune under DM model with expected fees of ₹800mn. It is also in process to unlock 3 more redevelopment projects in Mumbai with salable area of 0.3msf and salable area of ₹7bn. Overall Company added saleable area of ~3.5 msf to its portfolio in the last four months and now is targeting upcoming projects with saleable area of ~7.2 msf and topline potential of ₹57bn across the three cities.
*Decent Liquidity position:* KPDL has a healthy balance sheet with very comfortable level of liquidity position. With improved working capital it managed to reduce it net debt level by ₹1.24 bn to ~ ₹3.1bn in FY21. Its net D/E as on Mar’21 stood at 0.24. Going forward its net D/E is expected to remain under 0.5 and it will continue to have asset light approach in terms of selecting projects.
*Valuation:* KPDL trades at 14x and 9x its FY22E and FY23E earnings, respectively.
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