Kolte-Patil Developers LTD

Edelweiss Wealth Research
Kolte Patil Developers Ltd.
Pritesh Sheth Debashish Mazumdar

Research Analyst Research Analyst
Pritesh.sheth@edelweissfin.com Debashish.mazumdar@edelweissfin.c Date: January 8, 2021
om
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Long Term Recommendation
Kolte Patil Developers Ltd. Scaling up for next leg of growth
Kolte Patil Developers Ltd. (KPDL) is a leading Maharashtra-based real estate company with Pritesh Sheth
Research Analyst
consistent annual sales of >2msf over the last decade. It has an established presence in Pune, Pritesh.sheth@edelweissfin.com
and looking to expand its presence in Bengaluru and Mumbai. With robust project pipeline
of 4.5msf to be launched over the next 6-9 months, the company is set to report >3msf sales Debashish Mazumdar
for the first time in its three-decade long history. Further, the company is aiming to expand Research Analyst
Debashish.mazumdar@edelweissfin.com
its sales base to 5msf by FY23-24E and add deals worth 10-12msf over the next 12-18
months. Despite the aggressive deal additions, the company is expected to maintain its
CMP: INR 273
balance sheet resilience, led by potential net cash flows of INR2,000cr (post-tax, KPDL share)
from ongoing/upcoming projects over the next 4-5 years. The valuation gap and upside Target price: INR 319
potential from deal additions makes KPDL an attractive stock in the current real estate Rating: BUY
upcycle. We recommend a ‘BUY’ rating with NAV-based price target of INR 319 and 17%
Upside: 17%
upside potential.
Further potential upside:
Improved affordability provides a multi-year upcycle opportunity for the sector 50-60% (including upcoming
We believe residential real estate sector is poised for a multi-year upcycle opportunity given BD deals)
the decadal low interest rates which has materially improved affordability and helped narrow
the gap between rental yield and interest rates. Additionally, realized importance of owning a
home and additional space requirement given WFH scenario has influenced buying decisions.
In our view, this bodes well for players like KPDL who has the execution capability and balance
sheet strength to scale up their business to benefit from this upcycle opportunity.
Robust launch pipeline and prospective deal additions to fuel growth

Bloomberg: KPDL:IN
After a consistent performance over a last decade, KPDL is now looking to expand its sales
base. Plans are afoot to launch robust 4.5msf of projects over the next 6-9 months, which 52-week range (INR): 103/278
should lead to 10msf of saleable pipeline. Thus, we expect KPDL to report >3msf of sales in
FY22E for the first time in its history. Further, KPDL is aiming to be among the top-5 residential Share in issue (crore): 74
real estate players in India over the next 2-3 years with annual sales of 5msf. As a result, the M-cap (INR crore): 1,858
company is looking to add 10-12msf of projects over the next 12-18 months across markets.
Also, its plans to scale up its operations in Bengaluru and Mumbai from >0.25msf to 1.5msf or Promoter holding (%) 74.45
30% of targeted sales over the next 2-3 years.
Cash flow efficiencies and asset light strategy to retain balance sheet resilience
Since 2017, the company is extremely focused on cash flows. This has resulted in collections
of INR 1,368cr (12% CAGR rise) and operating cash flows (OCF) of >INR 250cr in FY19-20. With
strong cash flows, KPDL managed to give PE exits and further improved future cash flow
potential through higher economic interest. KPDL’s cash flow strength should continue over
the next 4-5 years thanks to potential net cash flows of INR 2,000cr from ongoing/upcoming
projects over the next 4-5 years. Moreover, KPDL’s asset light strategy will limit initial cash
outlays despite aggressive project additions. This would keep leverage below the target of 0.5x
Valuations attractive given potential cash flows and accretive deal additions
KPDL is expected to generate INR 3,800cr net cash flows from its ongoing, upcoming and future
(land bank) projects over the next 8-10 years. On discounting, this derives a value of INR
2,900cr v/s current EV of INR 2,400cr. Further, project additions should lead to NAV accretion
of INR 800-950cr or 100-120/share which is not built in our price target yet. We recommend
a BUY rating with target price of INR 319 and potential upside of 17%.
INR crore FY19 FY20 FY21E FY22E FY23E

Sales value 1,432 1,315 1,133 2,051 2,494
Y-o-Y Growth (%) 19 -8 -14 81 22
Average Realisation 5,302 5,259 6,219 6,789 8,271
(INR/sqft)
Collections 1,173 1,312 935 1,536 1,825
Operating cash flow 247 421 175 260 310
P/OCF (x) 7.7 2.1 10.6 7.1 6.0
Net Debt 741 631 558 521 364 Date: January 8, 2021
Net-Debt/Equity 1.0 0.8 0.6 0.5 0.3
Edelweiss Wealth Research 1

Kolte Patil Developers Ltd
Table of contents
Table of contents
Structure ........................................................................................................................................... 3
Focus charts ...................................................................................................................................... 4
I. Improved affordability provides a multi-year upcycle opportunity for the sector .................... 7
II. Upcoming launches to boost sales .......................................................................................... 8
III. Business development deals to provide growth visibility .................................................... 10
IV. Asset light strategy and cash flow efficiencies to retain balance sheet resilience ................ 11
Company Overview ......................................................................................................................... 14
Outlook and valuation .................................................................................................................... 18
Catalysts and Risks .......................................................................................................................... 22
Management Profile ....................................................................................................................... 23
Financial Analysis ............................................................................................................................ 24
Financials ........................................................................................................................................ 26

Structure
We expect KPDL to report 33% CAGR in operating cash flow (OCF) over FY21-23E driven by:
(a) Healthy recovery in collections (40% CAGR over FY21-23E) post 29% decline YoY in FY21E helped by
(b) Construction progress trigerring milestone payments and 40% rise in sales boosted by 4.5msf launches during the same period
(c) partially offset by higher construction spend with expected 16.6msf of projects under construction and higher employee costs.
KPDL ticks all the right boxes in our opinion as one of the key beneficiaries of ongoing residential consolidation for the factors given below:
a) Exposure to three of the top-4 residential markets with established presence in Pune and scaling up in Bangalore and Mumbai
b) Upcoming launches and prospective deal additions will help gain market share
c) Cash flow efficiencies aiding healthy balance sheet strenghth and further scope for business expansion
We initiate coverage on Kolte Patil Developers Ltd. (KPDL) with a ‘BUY’ recommendation and target price of INR319, 17% upside potential
Over the last decade, KPDL has reported KPDL has further 16msf of land bank Robust operating cash flows will
>2msf of annual sales and is now at the which in our view will be developed in 8- keep leverage below the
inflection point with upcoming 4.5msf of 10 years. Company is also looking to add company’s target of 0.5x equity
launches. KPDL will likely report >3msf of 10-12msf of deal in its future project despite prospective deal additions
sales for the first time in its history in FY22 pipeline over the next 12-18 months
Amount Amount INR cr. ( KPDL

FY20 FY21E FY22E FY23E
Particulars (INR cr.) Particulars (INR cr.) share)
Ongoing Projects Future projects Collections 1,312 935 1,536 1,825
Pending receivables from sold 12,000- Costs -564 -524 -1,003 -1,173
Inventory 1,365 Revenue potential 13,000
Other Exp. -233 -178 -186 -239
Unsold Inventory 2,132 EBITDA @ 25% margin 3,125
Taxes -94 -58 -87 -103
Total inflow 3,498 Taxes 781
OCF 421 175 260 310
Pending construction 1,580 Net cash flow 2,344
Net Debt 631 558 521 191
Net cash flow 1,918
KPDL share 2,039 Debt/Equity 0.69 0.63 0.53 0.14
Taxes 479
Net cash flow post taxes 1,438
KPDL share 1,251
Upcoming projects
Revenue potential 4,150
EBITDA @ 25% margin 1,038
Taxes 259
Net cash flow 778
KPDL share 739
Total ongoing & upcoming projects 1,991
NAV of ongoing/upcoming projects of INR Future projects from existing land bank Adjusting for net debt we arrive at
 
1600cr will contribute INR 1300cr to NAV a target price of INR 319/share
Upside of 17%
Further, prospective deal additions of 10-12msf will

further add INR 800-950cr or 100-120/share to the NAV
which is not considered in our pirce target yet
Upside of 50-60%

Focus Charts
Story in a nutshell
Exhibit 1: Improved affordability provides a multi-year Exhibit 2: Gap between rental yield and interest rate has
upcycle opportunity narrowed, which has also influenced buying decisions
1.6 Ratio of EMI payment to Disposable income 12%
1.4 10%
1.2
8%
1.0
0.8 6%
0.6 4%
0.4
2%
0.2
2017
Current
2013
2014
2015
2016
2018
2019
2020
0.0
2013
2014
2015
2016
2017
2018
2019
2020
Current Home loan rate Effective interest rate Rental yield
Exhibit 3: KPDL is looking to expand its sales base Exhibit 4: As a result, KPDL is likely to report >3msf of sales for
through robust launch pipeline of 6.3msf, including the first time in its history
future launches
10 3,000 3.0 3.5
3.0
1.8 9.8 2.7
2,500 3.0
8 2.5
4.5 8.0 2.5
2,000 2.1
6 1.8
2.0
in msf
in msf
INR cr
1,500
4 1.5
1,000
3.5 3.56.3msf of 1.0
2 launches over
1,198
1,432
1,315
1,133
2,051
2,494
next 12 months 500 0.5
0.0
0 0 0.0
0.0
Completed Ongoing Upcoming Future Total FY18 FY19 FY20 FY21E FY22E FY23E
launches launches
Sales value (INR cr) Sales volume (msf, RHS)
Exhibit 5: KPDL is aiming to rank among the top-5 Exhibit 6: Current pipeline is insufficient to reach 5msf scale;
residential real estate players with an annual sales of 5msf KPDL is targeting 10-12msf of deal addition
over the next 2-3 years
Targeted city mix 7 Incremental 0.5-1.8msf of sales will be generated
Mumbai 6 from additional business deals
10% 5.0
5 4.3
1.8
4 3.5
1.2
msf
Bengaluru 0.5
20% 3
1.8 3.0 3.0 3.2
2
1 1.8
0
Pune FY21E FY22E FY23E FY24E
70%
Existing pipeline Through incremental deals
Source: Company, Edelweiss Wealth Research

Focus Charts
Exhibit 7: Focus on collection efficiencies has led to 12% Exhibit 8: Cash flow should remain strong given potential
CAGR rise in cash flows while sales grew at 3% CAGR cash flows from ongoing/upcoming projects
Collections (INR cr.)
1,400 Operating Cash Flow
600
1,368
1,300 FY 20-23E: 12% CAGR
500 554
1,247
1,200
400
INR crore
421
INR cr.
1,100
300
1,109
310
1,000 260
200 247
965
900 175
100
800
0
FY17 FY18 FY19 FY20
FY19 FY20 FY21E FY22E FY23E FY24E
Source: Edelweiss Wealth Research
Exhibit 9: Higher collections will lead to increase in cash flows partially offset by increased
construction outlay
Cash flows (INR crore) FY19 FY20 FY21E FY22E FY23E FY24E FY25E
Sales 1,431 1,315 1,133 2,051 2,494 2,795 2,204
Collections 1,173 1,312 935 1,536 1,825 2,501 2,428
Construction Cost -658 -564 -524 -1,003 -1,173 -1,488 -1,113
Other Expenses -167 -233 -178 -186 -239 -275 -346
Direct & Indirect Taxes -101 -94 -58 -87 -103 -185 -242
Operating Cash Flow 247 421 175 260 310 554 727
Exhibit 10: Asset light strategy and focus on cash flow efficiencies has enabled balance sheet
strength which will continue going ahead
800 1.6
700 1.4
741
677
600 1.2
660
631
572
500 1.0
558
521
517
INR cr.
400 0.8
455
434
405
300 0.6
364
361
324
288
200 0.4
167
100 0.2
0 0.0
FY16 FY17 FY18 FY19 FY20 FY21E FY22E FY23E
Net debt Net debt excl. OCDs Net debt/Equity (RHS) Net debt*/Equity (RHS)

Focus Charts
Exhibit 11: We see valuation gap as potential net cash flows exceed current enterprise value
Exhibit 12: Even on a discounted basis, NAV denotes potential upside of 17%
NAV Summary INR Crs Per Share as % of NAV as % of CMP
Ongoing projects 971 128 40% 47%
Upcoming projects 680 90 28% 33%
Future Pipeline (Land bank) 1,322 174 55% 64%
Gross Asset value 2,973 392 123% 143%
Net debt (558) (74) (23)% (27)%
Net Asset value 2,415 319 100% 117%
No. of share 7.6
Price objective 319
CMP 273
Upside 17%
Exhibit 13: Prospective business deal additions provide incremental 40-45% upside
500
400
433
74 114
300 174
319
319
319
200 Inceremental
90
218
upside of
100 40-45%
128
128
17% upside potential

0
Upcoming
NAV
Ongoing
Future Pipeline
Less: Net debt
Expected NAV
Potential BD
(Land bank)

Investment Hypothesis
I. Improved affordability provides a multi-year upcycle opportunity for the sector

Decadal low interest rates and stable prices has led to improvement in affordability
Interest rates for home loans has declined to below 7% from >10% a decade ago. Coupled with
Affordability has improved
to 0.5x from 1.5 in 2013. stable prices and rising income, affordability has improved significantly over the last 2-3 years. Ratio
of EMI payment to disposable income now stands at 0.5 versus 1.5 in 2013.
Gap between rental yield
and interest rate has
declined from 3.0% to 0.9% Further, low interest rates has also helped narrow the gap between rental yield and effective
interest rate which has been the key hurdle for a buying decision for a new home buyer. While the
rental yield continues to be stable at 2.5-3.0%, effective interest rate (excluding tax and PMAY
benefits) has declined from 6% in 2013 to 3.9% currently.
Exhibit 14: Improved affordability provides a multi-year Exhibit 15: Gap between rental yield and interest rate has
upcycle opportunity narrowed, which has also influenced buying decisions
1.6 Ratio of EMI payment to Disposable income 12%
1.4 10%
1.2
8%
1.0
0.8 6%
0.6 4%
0.4
2%
0.2
2017
2013
2014
2015
2016
2018
2019
2020
Current
0.0
2013
2014
2015
2016
2017
2018
2019
2020
Current
Home loan rate Effective interest rate Rental yield
Source: HDFC, Edelweiss Wealth Research

Note: Effective interest rate and EMI computed for property value of INR 45lacs with LTV ratio of 60% and 20yrs tenure.
WFH driving additional space requirement = upgradation led demand

Pandemic has made people realized importance of owning a home which has influenced buying
decisions of people waiting for an opportunity to buy homes. Further, additional space requirement
We believe residential real given WFH scenario is also leading to upgradation and thereby further housing demand. Based on
estate sector is poised for a
multi-year upcyle which
these factors we believe the ongoing recovery has fuel for it to sustain and residential real estate
bodes well for players with sector is poised for a multi-year upcycle opportunity.
execution capability and
balance sheet strength like
KPDL
Upcycle bodes well for players with execution capability and healthy balance sheet
While demand sentiment are positive supply side continue to consolidate due to concentrated
availability of growth capital and buyers preference on developers with limited execution risk. Thus,
in our view, upcycle opportunity during ongoing consolidation phase bodes well for players like
KPDL who has the execution capability and balance sheet strength to scale up their business.

II. Upcoming launches to boost sales

4.5msf of upcoming With only 3.5msf of inventory left from its ongoing projects, KPDL is targeting the next leg of growth
launches will help KPDL with 4.5msf of planned launches over the next 6-9 months (including 1.4msf in its most successful
report >3ms of sales for
Life Republic project). Of the 4.5msf pipeline, ~2.2msf of projects are likely to be launched in
first time in history
Q4FY21, which includes three society redevelopment projects in Mumbai.
Exhibit 16: Robust launch pipeline of 4.5msf of projects over next 6-9 months
Projects Location Use Saleable Area (msf.) Tentative launch date
Pune 3.8
Life Republic R10 Hinjewadi, Pune Residential / Retail 1.4 Q4FY21
Giga Viman Nagar Commercial 0.6 2HFY22
Boat Club Boat Club Road Commercial 0.4 2HFY22
Down Town Kharadi Residential / Retail 0.5 Q2FY22
Pimple Nilakh Pimple Nilakh Residential 0.6 Q2FY22
Wagholi Wagholi Residential 0.3 Q4FY21
Mumbai 0.5
Sagar Vaibhav Dahisar Residential 0.2 Q4FY21
Hari Ratan Goregaon Residential / Retail 0.3 Q4FY21
Om Shree Gokul Borivali Residential / Retail 0.1 Q4FY21
Bengaluru 0.3
Raaga 3 Hennur Road Residential 0.3 1QFY22
Total 4.5
Post these launches, KPDL’s near term project pipeline is expected to reach 10msf – this includes
3.5msf of ongoing project inventory and further 1.8msf of expected launches over the next 12
months. With fresh launches, sales should get a boost and are likely to breach the 3.0msf mark in
FY22 – a first in the company’s history.
Exhibit 17: Post upcoming/future launches, total pipeline Exhibit 18: Sales run rate is expected to cross 3.0msf mark
will reach 10msf = 3 years of growth visibility in FY22 – a first in the company’s history
3,000 3.0 3.5
10 3.0
1.8 9.8 2.7 3.0
2,500 2.5
8
4.5 8.04 2.1 2.5
2,000 1.8
INR cr
6 2.0
in msf
1,500
1.5
4 1,000
1.0
3.54
1,198
1,432
1,315
1,133
2,051
2,494
3.5 500 0.5

2 ~6.3 msf of planned
launches over next 0 0.0
0.01 12m
0 FY18 FY19 FY20 FY21E FY22E FY23E
Completed 0.01
Ongoing Upcoming Future Total
launches launches Sales value (INR cr) Sales volume (msf, RHS)

KPDL is expected to deliver average realization at 16% CAGR to INR 8,200/sqft over the next three
years. This will be driven by launch of higher realization projects in Mumbai, commercial projects in
Pune, and the luxury Raaga 3 project in Bengaluru. Thus over FY21-23E, KPDL is expected to deliver
sales volumes at 22% CAGR and sales value at 40% CAGR.
Exhibit 19: Realization of upcoming launches are 75% higher Exhibit 20: Expect 16% CAGR in average realization over next
than current average due to Mumbai and commercial three years
projects
25,000 9,000 Realisation (INR/sqft)
20,755
Realisations for upcoming FY 20-23E: 16% CAGR
20,000
launches are 75% higher 8,000
8,271
than current levels
15,000
INR/sqft
7,000
10,000 7,625
6,789
6,000
5,259
6,219
5,000
5,760
0 5,000
5,302
5,259
Mumbai projects Pune and Bengaluru
4,000
Realisation FY20 Average Realization
FY18 FY19 FY20 FY21E FY22E FY23E
We expect Mumbai region to contribute 11% of total sales in FY23 versus close to 1% in FY20. This
increase in sales mix from Mumbai is leading to 16% CAGR in realization over FY20-23E.
Exhibit 21: Increase in sales contribution from Mumbai will lead to higher blended
realization
AR
6,310 6,009 20,755
>>>
92%
81%
10x Jump
8% 8% 0% 11%
Pune Bengaluru Mumbai
FY20 FY23E
Source: Company, Edelweiss Wealth Research Note: AR is Average realization (INR/sqft)

III. Business development deals to provide growth visibility

KPDL targets to scale up to 5msf of annual sales over FY23-24E. Of this, 70% or 3.5msf will be in
Pune, 20% or 1msf in Bengaluru and the rest 10% or 0.5msf in Mumbai. While the company’s
current and future project pipeline is expected to suffice 3.0-3.5msf of sales, KPDL is looking to add
10-12msf of business development deals (especially in Pune and Bengaluru) to reach its target of
KPDL targets 10-12msf of 5msf. The company is confident of closing these deals over the next 12-18 months.
deals over next 12-18
months to scale up to 5msf
of annual sales Given the need to conserve cash, a large part of these deals are expected to be under partnership
agreements with land owners, which will ensure liquidity. Once more clarity emerges on the
demand outlook, KPDL might also consider outright land purchases (but only selective parcels with
minimum holding period).
Growth strategy:
Pune: Of the 10-12msf of planned deal addition, the company is very near to signing 3.0-3.5msf
deals in Pune (expected to close in Q4FY21). KPDL will further look to add deals of similar scale.
Bengaluru: As of now, KPDL does not have any upcoming projects in its Bengaluru pipeline. The
company is planning to add 2-3 deals with saleable area of around 1msf each to reach the targeted
scale of 1msf annual sales.
Mumbai: With eight society redevelopment projects (total saleable area of 1.2msf), KPDL is
comfortable with its current project pipeline in Mumbai. That said, the company will continue to
seek JV/JD projects or outright land deals as a part of its future growth strategy for Mumbai.
Exhibit 22: Target of 5msf annual sales over next 2-3 years Exhibit 23: Looking to add 10-12msf of projects in Pune and
with Pune contributing 70% of sales Bengaluru to reach targeted sales
Targeted city mix 7 Incremental 0.5-1.8msf of sales will be generated
Mumbai 6 from additional business deals to reach 5msf sales
5.0
10%
5 4.3
1.8
4 3.5
1.2
Bangalore 0.5
20% 3
1.8 3.0 3.0 3.2
2
1 1.8
0
Pune
70% FY21E FY22E FY23E FY24E
Existing pipeline Through incremental deals

IV. Asset light strategy and cash flow efficiencies to retain balance sheet resilience
KPDL has followed an asset light development model by strategically partnering with PE firms for
large scale projects, which has helped the company to de-risk execution and enabled front-ended
construction financing. This strategy has ensured sustenance of the KPDL’s balance sheet strength.
Exhibit 24: Strategic engagement with PE partners ensures an asset light business model (Few of the PE deals entered by KPDL)
Date Company/Fund Subsidiary Project Investment (INR cr) Stake
Apr'20 Planet Smart City KPIT Life Republic 172 1.4msf land parcel
Dec'17 KKR KPIT Life Republic 193 NA
Dec'15 JP Morgan Asset management NA Jay Vijay 120 NA
Apr'14 ASK real estate fund NA Three Jewels 116 70%
2009 Portman Holdings Tuscan Estate Tuscan NA 50%
2009 Portman Holdings NA Margosa Heights NA 50%
Leverage to remain at 0.5x of Equity despite aggressive deal addition outlook

While KPDL is looking to aggressively boost its future project pipeline, leverage (Net debt to Equity)
should remain at current levels of 0.5x due to the company’s asset light strategy. According to
KPDL’s management, a large part of the deal additions are expected to be partnership
Healthy cash flow agreements. Under such agreements, for a 1msf deal the initial outflow should not exceed INR10-
generation to help KPDL 15cr. Given the cash flow efficiency we expect KPDL’s operating cash flow to be sufficient enough
maintain leverage below for upfront deal payments of that scale.
0.5x
Exhibit 25: Asset light strategy and focus on cash flow efficiencies has enabled balance sheet
strength
800 1.6
700 1.4
741
677
600 1.2
660
631
572
500 1.0
558
521
517
INR cr.
400 0.8
455
434
405
300 0.6
364
361
324
288
200 0.4
167
100 0.2
0 0.0
FY16 FY17 FY18 FY19 FY20 FY21E FY22E FY23E
Net debt Net debt excl. OCDs Net debt/Equity (RHS) Net debt*/Equity (RHS)
Focused strategies have led to improved collection efficiency

Over the last four years, KPDL has identified collections as a key success factor and given it utmost
focus. Thus, over the same period, the company has reported 12% collection CAGR despite a mere
3% sales CAGR.

Exhibit 26: KPDL followed a framework to improve its collection efficiency
Exhibit 27: Focused framework has resulted in 12% collection CAGR despite 3% sales CAGR
1,400 Collections (INR cr.)
1,368
1,300 FY 20-23E: 12% CAGR
1,200
1,247
INR cr.
1,100
1,109
1,000
965
900
800
FY17 FY18 FY19 FY20

Improved collection Improved collection efficiencies and sales growth to further enhance cash flows
efficiencies has enabled PE Improved collection efficiencies have played a major role in enhancing cash flows. This has enabled
exits over the last 2-3 years
which has ensured healthy
PE exits over the last 2-3 years without any pressure on KPDL’s balance sheet. These PE exits should
cash flow generation for ensure healthy cash flow generation for KPDL with increased economic interest. For e.g. ICICI
KPDL with increased Venture’s stake buyout of INR210cr from Life Republic project was largely funded through internal
economic interest
accruals. Economic interest improved from 45% to 95% for KPDL’s most successful project.
Further, with the expected rise in sales, collections should further increase to INR 1,800-2,500cr
(excluding partner’s share) by FY23-25E from INR1,300cr in FY20. This will be partially offset by
increased construction outflow, leading to net operating cash flow of INR300-727cr (excluding
partner’s share).
KPDL targets 1000cr of Exhibit 28: Operating cash flow expected to further improve with rise in sales
operating cash flow by Cash flows (INR crore) FY19 FY20 FY21E FY22E FY23E FY24E FY25E
FY23-24 taking into Sales 1,431 1,315 1,133 2,051 2,494 2,795 2,204
consideration 5msf of Collections 1,173 1,312 935 1,536 1,825 2,501 2,428
annual sales
Construction Cost -658 -564 -524 -1,003 -1,173 -1,488 -1,113
Other Expenses -167 -233 -178 -186 -239 -275 -346
Direct & Indirect Taxes -101 -94 -58 -87 -103 -185 -242
Operating Cash Flow 247 421 175 260 310 554 727

Company Overview
Established player in Pune, one of India’s key IT hubs

KPDL is one of the leading real estate developers in India with an established presence in Pune. The
company is looking to strengthen its foothold in Bengaluru and Mumbai’s residential real estate
markets. Over the last five years, Pune contributed >90% of KPDL’s total sales (Bengaluru
contributed 8% while Mumbai contributed a marginal 1-2%).
Exhibit 29: Highly concentrated in Pune market with more than 90% of sales
Average sales mix in last 5 years
Mumbai
Bengaluru 1%
8%
Pune
91%
According to a Knight Frank research, Pune is amongst the top-4 residential real estate markets in
India. Over the last seven years, Pune has delivered a consistent annual sales run-rate of 30-35k
units. During the same period, launches have largely matched demand, keeping inventory in check
at ~40-50k units or 18-24 months of sales.
Exhibit 31: Inventory overhang of 18-24 months looks

Exhibit 30: Stable market with annual sales of 30-35k units
manageable
60 80 30
'000 units
'000 units
50 25
56
60
48
40 20
45
45
38
30 40 15
36
35
34
34
34
33
33
32
31
20 10
20
20
10 5
62
69
68
62
50
28
28
39
43
13
13
10
0 0 0
2012
2013
2014
2015
2016
2017
2018
2019
1HCY20
2012
2013
2014
2015
2016
2017
2018
2019
1HCY20
Units Sold Launches Inventory Months of Inventory (RHS)
Office absorption instills confidence in stability of housing demand

Pune is home to several large domestic and multinational organizations, including global tech giants
(Infosys, IBM, Microsoft, Wipro and Tech Mahindra), large auto companies (GM, Daimler, Bajaj Auto
and Tata Motors) and financial institutions (Credit Suisse, etc.). IT/ITES sector dominates office
absorption in Pune with over 50% share. The BFSI sector (back office operations of large financial
institutions) constitutes 8% of the absorption share.

Company Overview
Exhibit 32: Pune is amongst the top-5 office real estate Exhibit 33: Absorption share is dominated by IT/ITES and
markets with annual absorption of more than 6msf back offices of BFSI
7 16% CY19 absorption share
6.9
6 Other
6.6
services,
6.2
5 12%
30%
5.5
4
in msf
4.5
4.5
8%
4.1
3.8
3
IT/ITES,
2.7
2
2.5
2.5
4%
55%
2.1
2.0
1
0.2
Manufactur
0 0%
ing, 8%
2014 2015 2016 2017 2018 2019 1H2020
BFSI, 8%
Absorption Completion Vacancy (RHS)
Source: Knight Frank, Edelweiss Wealth Research
The Pune market has been creating 50,000-60,000 fresh employment opportunities annually, which
can be gauged from the city’s annual office space absorption of ~4.0-6.5msf. This has created
housing shortage in Pune. Thus, we believe housing demand in Pune will atleast remain at existing
levels and could also see an uptrend with improved affordability.
Dominant 10% market share in Pune market

KPDL market share in Pune has improved from 6% in 2014 to 10% in 2019. KPDL has projects spread
across Pune – Central (Boat Club road, Kalyani Nagar), West (Hinjewadi, Wakad), East (Kharadi,
Wagholi, Viman Nagar), North (Pimpri Chinchwad) and South (NIBM) markets.
Exhibit 34: KPDL dominates Pune market with 10% market share
16%
18%
16%
12%
14%
11%
10%
12%
10%
8%
7%
7%
7%
8%
6%
6%
6%
4%
2%
0%
0%
0%
0%
0%
2014 2015 2016 2017 2018 2019 1HCY20
Volume share Launch share
Source: Knight Frank, Company, Edelweiss Wealth Research
Looking to expand in Bengaluru and Mumbai

KPDL has been present in Bengaluru for over two decades. However, with total project portfolio of
2.5msf, it is yet to find a strong footing in Bengaluru. The company entered the Mumbai market in
2015 with society redevelopment projects. Till date, KPDL has acquired 10 such projects; of this, it
has completed and delivered two projects (including the recently completed Jay Vijay project in
Andheri). With three upcoming launches (0.5msf) and further five projects in the pipeline, Mumbai’s
share in KPDL’s total sales is expected to increase to over 5% in the near term.

Company Overview
With the Pune market likely to mature for KPDL, the company is looking to further expand its
presence in Bengaluru and Mumbai. KPDL expects share of sales from Bengaluru and Mumbai to
increase to 25% over the next 2-3 years from 10% currently.
Exhibit 35: Aiming to expand sales base in Bengaluru and Mumbai

350
290
'000 sqft
270
300
250
250
200
200
200
150
150
82
100
34
23
50
17
14
2
2
0
FY14 FY15 FY16 FY17 FY18 FY19 FY20
Bengaluru Mumbai
Consistent performer in real estate sector

KPDL’s ability to drive sales even during the sustenance period has led to consistent performance
over the last 10 years. During this period, KPDL clocked sales of >2msf every year with significant
growth seen in years of project launches. To drive sustenance sales, the company has laid out
focused strategies, including successful marketing campaigns like ‘Nest Fest’ in 2015 and
‘ZABARDUS’ for Life Republic project in 2019.
Exhibit 36: Focus on sustenance sales has led to consistent Exhibit 37: …even as projects were launched in a staggered
performance… manner
2.9 2.9
2,000 3.0
2.7 5.3
2.6
2.5
1,500 2.6
2.2
INR cr.
2.1 2.1 2.1 3.2

1,000 2.2
500 1.8 1.8

1,100
1,250
1,150
1,677
1,262
1,220
1,198
1,432
1,315
0 1.4
FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 0.0 0.0 0.0 0.0
Sales value (INR cr) Sales volume (msf, RHS) FY14 FY15 FY16 FY17 FY18 FY19 FY20

Company Overview
Presence across product segments

KPDL offers products across price categories i.e. affordable, mid-income and luxury. Mid-income
group (MIG) projects contribute >60% of the company’s sales and remain the key focus segment.
Over the last four years, KPDL has increased its exposure to the affordable segment with the launch
of Ivy Estate and Three Jewels. The company caters to the luxury segment through its 24K brand.
Exhibit 38: Product offerings across price categories; mid-income projects dominate sales mix
100% 5% 4% 4% 5% 5% 8%
11% 8% 6%
20% 11% 11%
80% 15% 23% 13%
24%
36% 29%
60% 49% 36%
51% 55%
40% 47% 61% 34% 42%
16% 26%
20% 16%
17% 15% 21% 20%
9% 11% 14% 17%
0% 1% 0% 7%
FY14 FY15 FY16 FY17 FY18 FY19 FY20 1HFY21
Affordable Township MIG 24K/Luxury DMA

Outlook and Valuation
Simplified cash flow model suggests valuation gap

KPDL is expected to generate INR 3,500cr of gross cash flow from sales receivables INR 1,400cr and
unsold inventory INR 2,100cr v/s pending construction outlay of INR 1,600cr. This should lead to a
pre-tax net inflow of INR 1,900cr. Adjusting for taxes and partners’ share, net cash flow is expected
at ~INR 1,250cr.
Further, the company will realize INR800cr net cash flow from upcoming 4.5msf launch pipeline.
Thus, it will generate INR 2,000cr net cash flows from ongoing/upcoming projects over the next 3-5
years. At CMP of INR 273, these cashflows constitute 78% of the enterprise value. This means a
steep discount to the potential INR 1,800cr net cash flows from future land bank development and
nil value to targeted 10-12msf of project additions, leading to further upside potential.
Exhibit 39: We see valuation gap as potential net cash flows exceed current enterprise value
NAV-based model denotes 17% upside; prospective business deals offer further 40-45% upside
We value the above potential cash flow stream on a discounted basis using 15% weighted average
cost of capital, leading to gross asset value of INR 2,973cr or INR 392/share. Adjusting for
consolidated FY21E net debt of INR 558cr (including OCDs), we arrive at NAV of INR 2,415cr or INR
319/share. This at current CMP of INR 319/share denotes an upside of 17%.
We have not assigned any value to the targeted 10-12msf potential project additions yet. We
ascribe INR 800-950cr or 100-120/share value to prospective business deal additions which
provides an upside potential of 50-60% from current CMP.
Exhibit 40: Our discounted cash flow model suggests 17% upside at CMP
NAV Summary INR Crs Per Share as % of NAV as % of CMP
Ongoing projects 971 128 40% 47%
Upcoming projects 680 90 28% 33%
Future Pipeline 1,322 174 55% 64%
Gross Asset value 2,973 392 123% 143%
Net debt (558) (74) (23)% (27)%
Net Asset value 2,415 319 100% 117%
No. of share 7.6
Price objective 319
CMP 273
Upside 17%

Exhibit 41: Prospective business deal additions provide incremental 40-45% upside
500
400
433
74 114
300 174
319
319
319
200 Inceremental
90
218
upside of
100 40-45%
128
128
17% upside potential
0
NAV
Upcoming
Ongoing
Future Pipeline
Less: Net debt
Expected NAV
Potential BD
(Land bank)
Sensitivity
WACC: We have assumed cost of equity at 15%. For cost of capital, we have considered current cost
of debt at 10.5%, which on weighted average basis amounts to 12% for KPDL. Note that 1% change
in WACC leads to 2-3% change in NAV or Target price.
Price and construction cost estimate: We have assumed 3% increase in real estate prices FY24
onwards and expect 3% inflationary rise in construction costs annually. Note that 1% change in our
price or construction cost estimates leads to 5-6% change in NAV or target price.
Exhibit 42: 1% change in WACC leads to 2-3% change in NAV Exhibit 43: 1% change in price and cost assumptions leads
estimates to 5-6% change in NAV estimates
Sensitivity to NAV & PO Sensitivity to NAV & PO
Cost of Equity Change in Price
13% 14% 15% 16% 17% 1% 2% 3% 4% 5%
Construction cost
8.5% 349 339 330 320 311 1% 326 340 355 370 386
Cost of Debt
Change in
9.5% 343 333 324 315 306 2% 308 322 337 352 368
10.5% 337 328 319 310 301 3% 290 304 319 334 350
11.5% 332 322 313 305 296 4% 270 284 299 315 330
12.5% 326 317 308 300 291 5% 250 264 279 294 310
Land bank likely to be up for development over next 8-10 years

Based on FSI of 1.0, KPDL’s Life Republic project has pending saleable area of 10.4msf, which
constitutes 60% of its total land bank. The state government’s integrated township norms state
potential FSI of 1.7. This could add 11.6msf of additional saleable area, which we have not yet
considered in our calculation. According to KPDL’s management, the company might potentially
use FSI of 1.3-1.4 only if realisation reaches above INR6,000/sqft. This could add INR40/share to
NAV once developed.
Considering the location of the company’s land bank, we believe most of them would be up for
development over the next 5-6 years. Approvals for other society redevelopment projects in
Mumbai are expected over FY22-23.

Exhibit 44: Expect KPDL to develop 16.2msf of land bank within 8-10 years
Saleable area (msf) KPDL Share KPDL Share (msf)
Life Republic 10.4 95% 9.8
Ghotawade 3.2 50% 1.6
Aundh 1.0 100% 1.0
Kalyani Nagar 1.0 100% 1.0
Other Mumbai projects 0.7 100% 0.7
16.2 14.1
Exhibit 45: Large part of land bank in close proximity to office hubs
Exhibit 46: Future society redevelopment projects in Mumbai to be launched over FY22-23
Source: Company Presentation

0
0
0
0
50
100
200
300
400
500
600
100
200
300
400
500
100
200
300
400
500
600
700
100
150
200
250
300
350
400
Jan-18 Jan-18 Jan-18 Jan-18
Apr-18 Apr-18 Apr-18 Apr-18
Jul-18 Jul-18 Jul-18 Jul-18
Oct-18 Oct-18 Oct-18 Oct-18
Edelweiss Wealth Research

SOBHA
Kolte Patil
Oberoi Realty
Prestige Estate
0
0
0
50
50
50
100
150
200
250
300
100
150
200
100
150
200
250
300
1000
1200
1400
1600
0
200
400
600
800

DLF
Exhibit 47: 1-year stock price performance Real Estate Companies
Brigade
Purvankara

Godrej Properties

21
Source: Bloomberg, Edelweiss Professional Investor Research
Catalysts & Risks
Catalysts & Risks:

Catalysts
• Deal addition: Our target price derived from NAV does not include potential upside from future
project addition. The company is targeting 10-12msf deal additions over the next 12-18 months,
which are key upside catalysts.
• Cash flow efficiencies: We expect the company to generate INR200-400cr of operating cash
flows annually over the next 2-3 years. Any efficiency initiatives, which leads to faster-than-
expected collections or lower-than-expected construction/overhead spends will result in higher
cash flows, leading to an upside.
• Project-specific price hikes: We have assumed realizations across projects to remain flat until
2024. If the company manages to improve realisation at any of its ongoing/upcoming projects,
it will lead to improvement in cash flows, and thereby, the NAV.
Risks
• Hurdles in demand recovery: According to the management, demand has fully recovered to pre-
Covid levels. However, any hurdles in this recovery will impact the project offtake, launch plans
and delay the company’s cash flows.
• Delay in consolidation: Any delay in the sector’s inevitable consolidation will hamper the
company’s project addition plans, and thus, future growth visibility, which will lead to a potential
downside risk
• Rise in interest rate: An increase in interest rate will not only impact the discount rate for future
cash flows but would also impact demand sentiment, which has improved due to the rise in
affordability owing to the decline in interest rate.
 High concentration to Pune market: Pune market constitutes >90% of sales currently. Despite
ramp up of other markets i.e. Bangalore and Mumbai contribution from Pune market is expected
to remain at 70% in medium term. Any change in demand outlook in Pune will materially impact
KPDL’s future growth outlook

Management Profile
Exhibit 48: Management team of Kolte Patil Developers

Years of
Name Designation Details
experience
Mr. Rajesh Patil holds a degree in Civil Engineering from the University of
Mysore. He has been associated as promoter of the company since
Chairman & Managing
Rajesh Patil 25 inception. He has more than 25 years of experience in the real estate
Director
business spanning business development, land procurement, funding
requirements and strategy.
Mr. Naresh Patil holds a degree in Commerce from University of Pune. He

Naresh Patil Vice Chairman 25 has more than ~25 years of experience in real estate development. He
handles the company’s Bengaluru-based projects.
Mr. Milind Kolte holds a degree in Law from the University of Amravati and
a degree in Commerce from University of Nagpur. He has more than 25
Milind Kolte Executive Director 25
years of experience in the real estate industry pertaining to legal matters,
operations, procurement, liaising and planning of construction activity.
Mr. Gopal Sarda joined KPDL in 2010 as a Sr. Manager – Finance and
Strategy. He went on to become Group President in 2016 and Group CEO
at the young age of 33 years. Mr. Sarda has played an instrumental role in
the company’s foray into the Mumbai market and scaling up of sales
Gopal Sarda Chief Executive Officer 12
velocity in Bengaluru. He has ensured large focus on collaborative work
culture, execution and accountability. At the same time, he has laid out
utmost importance on profitable growth without hampering quality of P&L,
balance sheet and cash flows.

Financial Analysis
Note: All the numbers discussed below are based on project completion method as per IND AS 115
Revenue growth to recover in FY22

While revenue in FY21 is expected to be impacted due to limited project completions we expect it
to recover from FY22 and report 82% CAGR over FY21-23E to INR 1860cr. We expect KPDL to deliver
5.5msf of projects in FY22-23E versus 0.85msf in FY21.
Exhibit 49: Revenue will recover in FY22 with 88% YoY growth to INR 1,168
Revenue growth to recover
2,000 100
in FY22. Stable EBITDA
1,800 80
margins will lead to 82%
1,860
YoY growth 1,600
60
1,400
40
1,403
1,200
INR cr.
1,190
1,000 20
1,130
800 0
600 866
(20)
621
400
200 (40)
0 (60)
Revenue (INR cr.) Growth YoY (%, RHS)
EBITDA margin to sustain between 25-30%

EBITDA margins are expected to remain stable between 25-30%. Expect EBITDA to grow by 154%
CAGR over FY22-23E to INR 533cr on the back of higher project completions.
Exhibit 50: EBITDA margins to recover to average 27-29% in FY21-23E

600 32
500 30
533
400 28
INR cr.
300 26
332
302
262
200 24
245
179
100 22
0 20
EBITDA (INR cr.) EBITDA margin (%, RHS)

Financial Analysis
PAT to grow five-fold in FY23E

PAT declined to 121cr in FY18 to 84cr in FY20. We expect PAT to grow five fold in FY23E to INR 225cr
registering a PAT margin of 12%.
Exhibit 51: PAT margins to recover to average 10-12% in FY22-23E

250 13
12
228
200
11
150 10
INR cr.
124
100 121 8
90
7
84
50
6
45
0 5
PAT (INR cr.) PAT margin (%, RHS)
Healthy return ratios to continue

At 10%/14% RoE/RoCE, KPDL generates the highest return ratios in the industry on the back of its
asset light strategy. We expect such healthy return ratios to continue and improve to 13%/20%
RoE/RoCE in FY22E.
RoE/RoCE to improve to
13%/20% in FY22 with
increase in profitability Exhibit 52: Return ratios continue to remain healthy and expected to increase in FY22
32.3
34
29
24 20.9
20.3
19
15.2
14.0 13.8 13.3
14 10.4 9.5 10.2
8.9
9
5.0
4
RoCE % RoE %

Financials
Income Statement (INR crs)

Year to March FY19 FY20 FY21E FY22E FY23E
Revenue 866 1,130 621 1,190 1,860
Direct costs 454 733 332 570 890
Indirect costs 150 151 110 288 436
Total operating expenses 604 884 442 858 1,326
EBITDA 262 245 179 332 533
Depreciation and amortisation 15 17 17 17 17
EBIT 247 228 162 315 516
Interest expenses 92 80 76 68 60
Other income 11 47 3 2 2
Profit before tax 166 195 90 249 458
Provision for tax 52 84 31 85 156
Core profit 114 111 59 164 303
Extraordinary items 0 0 0 0 0
Profit after tax 114 111 59 164 303
Minority Interest -24 -27 -15 -40 -74
Adjusted net profit 90 84 45 124 228
Equity shares outstanding 7.6 7.6 7.6 7.6 7.6
EPS (INR) basic 11.9 11.1 5.9 16.4 30.1
Diluted shares 7.6 7.6 7.6 7.6 7.6
EPS (INR) fully diluted 11.9 11.1 5.9 16.4 30.1
Dividend per share 2.4 0.0 2.0 2.0 2.0
Dividend payout (%) 20.0 0.0 33.8 12.2 6.6
Common size metrics- as % of net revenues

Operating expenses 69.8 78.3 71.1 72.1 71.3
Depreciation 1.7 1.5 2.8 1.4 0.9
Interest expenditure 10.6 7.1 12.2 5.7 3.2
EBITDA margins 30.2 21.7 28.9 27.9 28.7
Net profit margins 10.4 7.5 7.2 10.4 12.3
Growth metrics (%)

Revenues (38.3) 30.4 (45.0) 91.6 56.3
EBITDA (13.4) (6.3) (26.9) 85.0 60.8
PBT (18.1) 17.8 (54.0) 176.7 84.3
Net profit after minority interest (25.7) (6.6) (46.8) 176.7 84.3
EPS (25.7) (6.6) (46.8) 176.7 84.3

Financials
Balance sheet (INR Crs)

As on 31st March FY19 FY20 FY21E FY22E FY23E
Equity share capital 76 76 76 76 76
Reserves & surplus 764 829 789 898 1,111
Minority interest 6 15 15 15 15
Shareholders funds 846 920 879 988 1,202
Secured loans 395 364 289 214 64
Unsecured loans 412 365 365 365 365
Borrowings 807 729 654 579 429
Net Deferred tax -175 -141 -133 -110 -69
Long term liabilities 35 55 55 55 55
Current liabilites 1,858 1,924 1,829 1,935 1,998
Provisions 82 83 83 83 83
Total CL & provisions 1,940 2,007 1,911 2,018 2,081
Total Liabilities 3,452 3,569 3,366 3,529 3,697
Gross block 137 344 361 378 396
Depreciation 53 69 86 103 121
Net block 85 275 275 275 275
Capital work in progress 1 1 1 1 1
Total fixed assets 85 276 276 276 276
Goodwill 0 0 0 0 0
Investments 22 20 20 20 20
Inventories 2,827 2,758 2,552 2,690 2,803
Sundry debtors 108 62 68 130 178
Cash and equivalents 64 97 95 57 64
Loans and advances 327 338 338 338 338
Other current assets 18 19 19 19 19
Total current assets 3,344 3,274 3,071 3,233 3,401
Total Assets 3,452 3,569 3,366 3,529 3,697
Book value per share (INR) 111 119 116 130 159
Cash flow statement (INR Crs)

Net profit (before MI) 114 111 59 164 303
Add: Depreciation 15 17 17 17 17
Add: Misc expenses written off 0 0 0 0 0
Add: Deferred tax -19 19 8 22 41
Add: Others 77 31 72 66 58
Gross cash flow 188 179 157 270 419
Less: Changes in W. C. -120 153 105 -94 -98
Less: Capex 4 11 17 17 17
Free cash flow 64 321 244 158 304
Cash flow metrics

Investing cash flow 16 (66) (84) (15) (15)
Financing cash flow (120) (227) (180) (198) (299)
Net cash flow (36) 38 (2) (38) 7
Capex 4 11 17 17 17
Dividend paid 21 20 15 15 15

Financials
Profit & Efficiency Ratios

ROAE (%) 8.9 9.5 5.0 13.3 20.9
ROACE (%) 14.0 13.8 10.2 20.3 32.3
Debtors (days) 61 27 40 40 35
Current ratio 1.6 1.5 1.5 1.5 1.5
Debt/Equity 1.0 0.8 0.6 0.5 0.3
Inventory (days) 978 900 1,500 825 550
Payable (days) 110 90 110 90 70
Cash conversion cycle (days) 929 837 1,430 775 515
Operating ratios (x)

Total asset turnover 0.3 0.3 0.2 0.3 0.5
Fixed assets turnover 10.2 4.1 2.3 4.3 6.8
Equity turnover 0.9 1.3 0.7 1.3 1.7
Du pont analysis
NP margin (%) 10.4 7.5 7.2 10.4 12.3
Total assets turnover (x) 0.3 0.3 0.2 0.3 0.5
Leverage multiplier (x) 3.0 4.0 3.9 3.7 3.3
ROAE (%) 8.9 9.5 5.0 13.3 20.9
Valuation parameters
Diluted EPS (INR) 11.9 11.1 5.9 16.4 30.1
Y-o-Y growth (%) (25.7) (6.6) (46.8) 176.7 84.3
CEPS (INR) 13.9 13.4 8.2 18.6 32.4
Diluted P/E (x) 25.2 12.3 47.8 17.3 9.4
Price/BV(x) 2.3 1.0 2.1 1.9 1.5
EV/Sales (x) 3.1 1.4 3.9 2.0 1.2
EV/EBITDA (x) 10.2 5.4 13.4 7.2 4.2
Diluted shares O/S 7.6 7.6 7.6 7.6 7.6
Basic EPS 11.9 11.1 5.9 16.4 30.1
Basic PE (x) 25.2 12.3 47.8 17.3 9.4
Dividend yield (%) 20.0 0.0 33.8 12.2 6.6

Edelweiss Broking Limited, 1st Floor, Tower 3, Wing B, Kohinoor City Mall, Kohinoor City, Kirol Road, Kurla(W)
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st=MAHARASHTRA,
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Date: 2021.01.08 11:06:15 +05'30'
Rating Expected to
BUY appreciate more than 15% over a 12-month period
HOLD appreciate between 5% and 15% over a 12-month period
REDUCE return below 5% over a 12-month period
290
240
190
Indexed
140
90
40
Nov-16
Nov-17
Nov-18
Nov-19
Nov-20
Jul-16
Jul-17
Jul-18
Jul-19
Jul-20
Sep-16
Sep-17
Sep-18
Sep-19
Sep-20
Mar-18
May-19
Jan-20
Jan-16
Mar-16
May-16
Jan-17
Mar-17
May-17
Jan-18
May-18
Jan-19
Mar-19
Mar-20
May-20
Jan-21
Kolte Sensex

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Edelweiss Wealth Research

Kolte Patil Developers Ltd.

Pritesh Sheth Debashish Mazumdar

Robust launch pipeline and prospective deal additions to fuel growth

INR crore FY19 FY20 FY21E FY22E FY23E

Edelweiss Wealth Research 1

Edelweiss Wealth Research 2

Amount Amount INR cr. ( KPDL

Further, prospective deal additions of 10-12msf will

Edelweiss Wealth Research 3

Current Home loan rate Effective interest rate Rental yield

Source: Company, Edelweiss Wealth Research

Edelweiss Wealth Research 4

Source: Edelweiss Wealth Research

Source: Company, Edelweiss Wealth Research

Edelweiss Wealth Research 5

Source: Edelweiss Wealth Research

17% upside potential

Less: Net debt

Source: Edelweiss Wealth Research

Edelweiss Wealth Research 6

I. Improved affordability provides a multi-year upcycle opportunity for the sector

Home loan rate Effective interest rate Rental yield

Source: HDFC, Edelweiss Wealth Research

WFH driving additional space requirement = upgradation led demand

Edelweiss Wealth Research 7

II. Upcoming launches to boost sales

Projects Location Use Saleable Area (msf.) Tentative launch date

3.5 500 0.5

Source: Company, Edelweiss Wealth Research

Edelweiss Wealth Research 8

Source: Company, Edelweiss Wealth Research

Pune Bengaluru Mumbai

Source: Company, Edelweiss Wealth Research Note: AR is Average realization (INR/sqft)

Edelweiss Wealth Research 9

III. Business development deals to provide growth visibility

Existing pipeline Through incremental deals

Source: Company, Edelweiss Wealth Research

Edelweiss Wealth Research 10

Leverage to remain at 0.5x of Equity despite aggressive deal addition outlook

Source: Company, Edelweiss Wealth Research

Focused strategies have led to improved collection efficiency

Edelweiss Wealth Research 11

Exhibit 26: KPDL followed a framework to improve its collection efficiency

Source: Company, Edelweiss Wealth Research

1,300 FY 20-23E: 12% CAGR

Source: Company, Edelweiss Wealth Research

Edelweiss Wealth Research 12

Edelweiss Wealth Research 13

Established player in Pune, one of India’s key IT hubs

Source: Edelweiss Wealth Research

Exhibit 31: Inventory overhang of 18-24 months looks

Units Sold Launches Inventory Months of Inventory (RHS)

Source: Edelweiss Wealth Research

Office absorption instills confidence in stability of housing demand

Edelweiss Wealth Research 14

Source: Knight Frank, Edelweiss Wealth Research

Dominant 10% market share in Pune market

Volume share Launch share