Release Date: February 12, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Kolte-Patil Developers Ltd (BOM:532924, Financial) achieved a significant milestone in the residential real estate sector with record sales in 2024, highlighting strong demand and resilience.
- The company reported a 17% year-on-year growth in collections, reaching 1,729 crore, demonstrating strong execution capabilities and customer value proposition.
- Average realization improved by 7% during the nine months, with successful price hikes across projects, ensuring healthy margins.
- The Life Republic township project showed strong performance with a sales volume of approximately 1.5 million square feet and a 6% increase in realization.
- Kolte-Patil Developers Ltd (BOM:532924) is actively building a robust business development pipeline, including a 22-acre joint development project in Pune with a potential sellable area of 5 million square feet.
Negative Points
- The company faced delays in regulatory approvals for some Mumbai projects, which may moderately impact sales guidance.
- Despite improvements, the EBITA margin remains at 7.5%, with a need for further enhancement to meet long-term targets.
- There is a slight correction expected in pre-sales numbers due to delays in project launches.
- The finance cost allocation between PNL and WIP remains a concern, with a need for better visibility on project-specific costs.
- Kolte-Patil Developers Ltd (BOM:532924) has unsold inventory valued at approximately 2,500 crore, with a significant portion in the Life Republic project, indicating potential challenges in inventory management.
Q & A Highlights
Q: How is the demand outlook in Pune and Mumbai markets, and are you on track to achieve your pre-sales guidance of 3,500 crores this year and the three-year target of 13,500 crores?
A: In Pune and Mumbai, we have seen strong demand, and Q3 and Q4 are expected to be high-performing quarters. However, some delays in Mumbai project approvals may moderately impact our sales guidance. For the three-year target, we are in line with our long-term horizon, as these are temporary delays. - Atul Bora, Group CEO
Q: What are the expected project-level and company-level margins at the current pricing level?
A: We have seen an improvement in our EBITDA margin, reaching around 7.5% this quarter, with an adjusted EBITDA margin of 12.5%. Going forward, we expect these margins to continue improving. Project-level margins vary depending on the type of project, such as redevelopment or luxury segments. - Atul Bora, Group CEO
Q: How confident are you in launching Mumbai projects in FY26, given the current delays?
A: For Mumbai launches, we have secured sanctions for some projects, but redevelopment processes are longer due to additional requirements like vacation processes. We anticipate slight delays in a few Mumbai launches due to these factors. - Atul Bora, Group CEO
Q: What is the expected pre-sales number for next year if MMR comes into play in the second half?
A: At a group level, we maintain our long-term guidance. We are still targeting our pre-sales numbers, and any adjustments will be communicated as necessary. - Atul Bora, Group CEO
Q: Can you explain the concept of adjusted EBITDA and how it differs from reported EBITDA?
A: Adjusted EBITDA includes the reported EBITDA plus other income and the share of profit from joint venture companies. This provides a more comprehensive view of our financial performance. - Atul Bora, Group CEO
Q: What is the status of your business development pipeline, and how confident are you in achieving the 8,000 crore target?
A: We have secured 4,000 crores in business development and are confident in achieving the 8,000 crore target. Several deals are in advanced stages, and announcements will be made at the appropriate time. - Atul Bora, Group CEO
Q: What are the expected realizations for the recently announced 4,000 crore project, and when is it likely to be launched?
A: The project is a mixed-use development with expected average realizations around 8,000 per square foot. We anticipate launching it in 9 to 10 months, by the end of the financial year. - Atul Bora, Group CEO
Q: How does the company plan to address the valuation gap in the market, and is there any consideration for a buyback?
A: The decision on a buyback is primarily with the promoters, and as a professional, I have limited say in this matter. However, we acknowledge the feedback and will pass it on to the promoters. - Atul Bora, Group CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
