IGI Logo

Underwhelming quarter due to slower launches and completions

2Q to witness significant completions

* Kolte Patil Developers’ (KPDL) bookings declined 13% YoY/2% QoQ to INR6.2b (42% below our estimates) in 1QFY26, primarily due to the absence of new launches. Sales were mainly driven by sustenance inventory.

* Volumes declined 13% YoY but rose 5% QoQ to 0.8msf (32% below our estimates). Of these, 63% (0.53msf) was driven by KPDL's flagship project, Life Republic Integrated Township.

* Average realization declined 1% YoY/7% QoQ to INR7,337 (15% below our estimates).

* Collections stood at INR5.5b, down 10%/22% YoY/QoQ (33% below our estimates).

* On 23rd Jun’25, BREP Asia III India Holding Co VII Pte. Ltd. acquired a 14.3% stake in the company through a preferential allotment of equity shares.

* There were no material launches, land acquisitions, or completions in the quarter.

* KPDL continues to increase its presence in Mumbai and Bangalore and targets to achieve a 30% contribution cumulatively from these cities, with the remaining 70% from Pune.

* Operating cash flow stood at INR1.6b, down 34% YoY.

* KPDL’s debt-to-equity ratio stood at 0.19x at the end of 1QFY26. Excluding zero-coupon bond NCDs, the company was net cash at 0.26x.

* P&L performance: For 1QFY26, revenue declined 76%/89% YoY/QoQ to INR824m, which was a 90% miss from our estimates. Revenue was weak due to no completions during the period.

* EBITDA loss was at INR260m vs a profit of INR278m YoY (vs estimated EBITDA profit of INR1.8b). ? PAT loss stood at INR170m vs. a profit of INR62m in 1QFY25 (vs estimated PAT of INR1.1b).

Key concall highlights

* Demand: India’s GDP is projected to grow at a robust 6.5%, with economic momentum expected to remain steady. Demand trends continued to show resilience across KPDL’s core markets.

* Business development: Business development activity has gained strong traction, and the momentum is expected to accelerate further in FY26, with deal closures and land acquisitions likely to surpass the achievements of FY25.

* Guidance: Management expects a 30% YoY growth in pre-sales in FY26.

* Completions were muted during the quarter; however, with steady progress, 2QFY26 is expected to see significant completions, leading to stable revenues.

* Margin: KPDL’s margin threshold is 25-28% for outright acquisition deals and 16-18% for JV/JDA/redevelopment projects.

* Launches: There were no new launches during the quarter due to approval delays. The launch of Laxmi Ratan - Versova in Mumbai is expected in FY26. In Pune, NIBM and Wadgaon project (divided into three to four phases), with Phase 1 of 1.5msf scheduled to be launched this year. Overall, Pune is expected to see 5-5.5msf of launches (INR40b). In total, 6-7msf of area is planned for launch during this year (INR50-52b). Other Mumbai projects—Jal Mangal Deep Goregaon, Vishwakarma Nagar, and Jal Nidhi project—are currently in approval stages.

* Unsold inventory currently stands at 3.5msf, of which Life Republic contributes 1.6msf.

* Moreover, Life Republic contributed 57% to total pre-sales for 1QFY26.

Valuation and view

* KPDL has reported stagnant pre-sales over the last few quarters.

* Yet, we expect the company to post a 31% CAGR in pre-sales over FY25-27.

* Additionally, we have incorporated the 14.3% stake buyout by Black Stone through KPDL issuing preference shares. Accordingly, we have increased the share capital and number of shares, leading to a revised TP of INR489 (INR571 earlier). We reiterate our BUY rating with a potential upside of 16%.

For More Research Reports : Click Here 

For More Motilal Oswal Securities Ltd Disclaimer
http://www.motilaloswal.com/MOSLdisclaimer/disclaimer.html
SEBI Registration number is INH000000412