Kolte - Patil Developers Limited — Q1 FY25 earnings call

Call held 19 Aug 2024

Management summary

Kolte-Patil Developers reported a strong Q1 FY25 with record collections and improved pre-sales, driven by sustenance inventory. The company launched projects with a GDV potential of ₹1,500 crore year-to-date and reiterated ambitious guidance for FY25 launches and pre-sales, focusing on strategic business development and market presence. Despite lower reported revenues and margins in Q1 due to accounting recognition, management expressed confidence in achieving full-year targets.

Highlights

  • Pre-sales value for Q1 FY25 stood at ₹711 crore.

  • Sales volumes for Q1 FY25 were 0.96 million square feet.

  • Collections reached a record ₹612 crore in Q1 FY25, marking a 19% YoY growth.

  • Revenues for Q1 FY25 were ₹341 crore.

  • EBITDA for Q1 FY25 was ₹28 crore, with an EBITDA margin of 8.2%.

  • Net profit after tax post minority interest was ₹6.2 crore.

  • Net debt to equity improved to -0.05x as of June 30, 2024, indicating strong liquidity.

  • Operating Cash Flow for the quarter was ₹247 crore.

Key financials

  1. Pre-sales Value ₹711 Cr
  2. Sales Volumes 0.96 million sq ft
  3. Collections ₹612 Cr +19%YoY
  4. Revenue ₹341 Cr
  5. EBITDA ₹28 Cr
  6. EBITDA Margin 8.2%
  7. Net Profit After Tax ₹6.2 Cr
  8. Operating Cash Flow ₹247 Cr
  9. Net Debt to Equity -0.05×

What they filed

Q1 FY27: revenue up 1022.0%, net profit up 964.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue308 350 719 82 139 −55%265 −24%249 −65%920 +1022%
EBITDA16 26 106 -26 -37 −331%8 −69%-6 −106%189 +827%
Net profit10 26 66 -17 -11 −210%4 −85%-15 −123%147 +965%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

Volume

  • Saleable area launched (year till date) Volume · FY25 (year till date) · High confidence 2 million sq ft
    For the year till date, we have launched projects with saleable area of close to 2 million square feet

    — Atul Bohra, Group CEO

  • GDV potential of projects launched (year till date) Volume · FY25 (year till date) · High confidence Rs. 1,500 crore
    translating into GDV potential of about Rs. 1,500 crore.

    — Atul Bohra, Group CEO

Launch Pipeline

  • Total GDV potential of projects to be launched Launch Pipeline · FY25 · High confidence Rs. 8,000 crore
    we are confident of launching project with the total GDV of Rs. 8,000 crore during the current financial year.

    — Atul Bohra, Group CEO

Pre-sales

  • Pre-sale guidance Pre-sales · FY25 · High confidence Rs. 3,500 crore
    give us confidence to meet our FY25 pre-sale guidance of Rs. 3,500 crore.

    — Atul Bohra, Group CEO

  • Sales guidance Pre-sales · FY25 to FY27 · High confidence Rs. 13,500 crore
    the target is to Rs. 8,000 crore launches, pre-sales of Rs. 3,500 crore for FY25, Rs. 13,500 crore sales guidance for FY25 to FY27.

    — Atul Bohra, Group CEO

Profitability

  • Operating margins Profitability · FY25 · High confidence early teens
    For the full year, revenues will be in line with the stated guidance and operating margins will be in the early teens.

    — Atul Bohra, Group CEO

  • Embedded EBITDA margin (for Rs. 13,500 crore presales over 3 years) Profitability · next 3 years (FY25-FY27) · Medium confidence 18-20%
    we target somewhere around 18% to 20% of the margins.

    — Atul Bohra, Group CEO

  • Embedded PAT margin (for Rs. 13,500 crore presales over 3 years) Profitability · next 3 years (FY25-FY27) · Medium confidence 10-11%
    At PAT level around 10%, 11%.

    — Atul Bohra, Group CEO

Revenue

  • Full financial year revenue Revenue · FY25 · High confidence Rs. 1,800 crores to Rs. 1,900 crores
    For the full financial year, we foresee at Rs. 1,800 crores to Rs. 1,900 crores, and EBITDA margin in the early teens.

    — Atul Bohra, Group CEO

Risks & concerns

  • Project approval delays

    medium

    Management stated that sometimes approvals get delayed, citing recent delays after elections, impacting launch timelines.

    Management acknowledged

  • Lag in revenue/profit recognition vs. embedded margins

    medium

    Analyst questioned the lag between high embedded EBITDA/PAT margins and reported P&L, which management attributed to fixed overheads and revenue recognition timing.

    Analyst acknowledged

Areas of evasion (2)

  • Presales numbers from recently launched projects
  • Detailed reconciliation of embedded margins to reported P&L

Q&A highlights

3 direct
Contribution of new launches to Q1 sales and future sales ramp-up. Direct
So for the quarter 1, it is mainly from the sustenance sale. As I said that this quarter 2, we have launch of R5 and Wagholi and Altura - 3 projects. Like that, for every quarter, we have certain pipeline. So you will see contribution from the new launches from the next quarter onward.

Clarifies that Q1 sales were primarily from existing inventory, with new launches from Q2 onwards expected to drive future growth, impacting the sales run rate.

Asked by Shreyans Mehta (Equirus Securities)

Disconnect between high launch pipeline (Rs. 8,000 crore GDV) and lower presales guidance (Rs. 3,500 crore). Direct
So guidance is pretty much defined Rs. 3,500 crores, which is 25% annual year-on-year growth. At the same time, these launches, all launches are not coming in quarter 1 or quarter 2, it is spread across the financial year. So it never happened that the entire launches we target to sell in 1 financial year because the project gets settled and the pricing appreciations happen only once you show the confidence to the customer.

Addresses a key investor concern about the conversion rate of launch pipeline to presales, explaining the phased sales approach and long-term inventory strategy.

Asked by Bharat Sheth (Quest Investments)

Timeframe for redevelopment projects from acquisition to launch. Direct
Like in initial stages of design finalization, it needs consent of the members as well and then the approval process started. But typically, this phase is in the range of 12 to 15 months.

Provides crucial insight into the operational timelines and potential delays in redevelopment projects, which are a significant part of the company's strategy.

Asked by Himanshu Upadhyay (Buglerock PMS)

2 min read 6 chapters

Detailed narrative

Q1 FY25 Operational and Financial Performance

Kolte-Patil Developers reported a pre-sales value of ₹711 crore and sales volumes of 0.96 million square feet for Q1 FY25, showing marginal improvement year-on-year. Collections reached a record high of ₹612 crore, marking a 19% YoY growth. The company's flagship Life Republic project in Pune contributed 0.46 million square feet to Q1 FY25 sales volumes. Financially, Q1 FY25 revenues stood at ₹341 crore, with an EBITDA of ₹28 crore and an EBITDA margin of 8.2%. Net profit after tax post minority interest was ₹6.2 crore, and operating cash flow was ₹247 crore.

Robust Launch Pipeline and FY25 Guidance

Year-to-date, Kolte-Patil has launched projects with a saleable area of close to 2 million square feet, translating into a Gross Development Value (GDV) potential of approximately ₹1,500 crore. These launches include Phase 1 of the R5 sector in Life Republic, the last phase of 24K Altura, and Project Springshire at Wagholi (over ₹400 crore GDV). The company is confident in launching projects with a total GDV of ₹8,000 crore during FY25 and reiterated its FY25 pre-sale guidance of ₹3,500 crore, representing a 25% annual year-on-year growth.

Strategic Business Development and Market Focus

Management emphasized a judicious project acquisition strategy, focusing on financial prudence and diversification to deepen market presence and enhance capital productivity. The company aims to strengthen its brand presence across segments, from mid-priced to premium luxury. Redevelopment projects are a key focus, with a shift towards larger-scale developments, supported by an established team.

Financial Outlook and Margin Expectations

For the full financial year FY25, Kolte-Patil expects revenues to be in the range of ₹1,800-1,900 crore, with operating margins in the early teens. For the targeted ₹13,500 crore presales over the next three years (FY25-FY27), the company anticipates an embedded EBITDA margin of 18-20% and a PAT margin of 10-11%. Management noted that reported margins might lag embedded margins due to fixed overheads and revenue recognition timing but expressed confidence in meeting full-year guidance.

Mumbai Market Expansion and Project Timelines

The company has significant Mumbai launches planned for Q4 FY25, including projects at Jal Mangal Deep, Jal Nidhi, Nand Dham, Vishwakarma, and a Mulund project with 6.1 lakh square feet and ₹900 crore GDV potential. The Vishwakarma project is targeted for a Q4 launch, and Vashi for Q3. Management acknowledged that the typical timeframe from design finalization and member consent to project launch for redevelopment projects is 12-15 months, with potential delays due to approvals.

Collections and Liquidity Strength

Kolte-Patil achieved its highest-ever quarterly collections of ₹612 crore, reflecting a 19% year-on-year growth. This strong collection performance contributed to robust liquidity, resulting in a further reduction in net debt. The net debt to equity ratio stood at -0.05x as of June 30, 2024, indicating a healthy balance sheet position. Structured deals are utilized for growth capital, balancing debt and maintaining profitability.

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