Kolte - Patil Developers Limited — Q2 FY25 earnings call

Call held 13 Nov 2024

Management summary

Kolte-Patil Developers reported a strong operational performance in Q2 FY25, achieving its highest ever quarterly pre-sales value of Rs. 770 crore, a 22% YoY growth. Revenue and EBITDA saw significant increases for the quarter, though H1 revenue was lower YoY. The company maintains a robust launch pipeline and business development targets, with a focus on improving margins in the second half of the fiscal year, supported by a negative net debt position.

Highlights

  • Q2 FY25 pre-sales value reached Rs. 770 crore, marking a 22% growth YoY and the highest ever quarterly sales value.

  • H1 FY25 pre-sales value stood at Rs. 1,481 crore with volumes of 1.99 million square feet.

  • Q2 FY25 revenue increased to Rs. 308.3 crores from Rs. 198.2 crores in Q2 FY24, a 55.55% YoY growth.

  • Q2 FY25 EBITDA improved significantly to Rs. 16.2 crores from Rs. 3.5 crores in Q2 FY24, with an EBITDA margin of 5.6%.

  • Net debt as of September 30, 2024, was negative Rs. 58 crores, indicating a strong balance sheet.

  • The launch pipeline for FY25 was revised to Rs. 7,000 crore GDV, down from Rs. 8,000 crore, with Rs. 5,200 crore planned for H2 FY25.

  • The company maintains a BD target of Rs. 8,000 crores for FY25, primarily for FY26 launches.

Key financials

3 periods

Headline

  • Net Debt (Sep 30, 2024)
    ₹-58 Cr

Q2 FY25

  • Pre-sales Value
    ₹770 Cr
    YoY +22%
  • Revenue
    ₹308.3 Cr
    YoY +55.5%
  • EBITDA
    ₹16.2 Cr
    YoY +362.8%
  • EBITDA Margin
    5.6%
  • Net Profit
    ₹9.7 Cr
  • Operating Cash Flow
    ₹442 Cr

H1

  • FY25 Pre-sales Value
    ₹1,481 Cr
  • FY25 Revenue
    ₹649 Cr
    YoY -15.6%
  • FY25 EBITDA
    ₹43.9 Cr
  • FY25 EBITDA Margin
    7%
  • FY25 Net Profit
    ₹16 Cr

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

Revenue

  • Full Year Revenue Revenue · FY25 · High confidence ~Rs. 1,800 crore
    While the first half has been low on revenue recognition, we are on track to close the year with strong deliveries and revenue of ~Rs. 1,800 crore.

    — Atul Bohra, Group CEO

Margin

  • Full Year EBITDA Margin Margin · FY25 · Medium confidence 11-12%
    So at least for the financial year, we estimate around 11%, 12% is achievable number.

    — Atul Bohra, Group CEO

  • New BD Margin (Redevelopment) Margin · Ongoing · High confidence 16-18%
    Here onward also, when we are selecting a couple of redevelopment projects, we are setting our strategy of margin to the team at the time of acquisition itself, which is roughly around 16% to 18%.

    — Atul Bohra, Group CEO

  • New BD Margin (Outright Deals) Margin · Ongoing · High confidence around 25%
    For outright deal we have expectations of around 25% of the margin...

    — Atul Bohra, Group CEO

  • New BD Margin (Joint Venture Projects) Margin · Ongoing · High confidence around 17-18%
    ...for joint venture projects around 17%, 18% of the margins...

    — Atul Bohra, Group CEO

Launch Pipeline

  • Launch Pipeline GDV Launch Pipeline · FY25 · Medium confidence Rs. 7,000 crore

    Previously Rs. 8,000 crore → Rs. 7,000 crore

    As we look ahead, our launch pipeline remains robust, with projects representing a total GDV of Rs. 7,000 crore planned for the fiscal year.

    — Atul Bohra, Group CEO

  • H2 Launch Pipeline GDV Launch Pipeline · H2 FY25 · Medium confidence Rs. 5,200 crore
    So you have around Rs. 5,200 crores of launches in second half of FY '25.

    — Biplab Debbarma, Analyst (confirmed by Atul Bohra)

Business Development

  • BD Goals Business Development · FY25 · High confidence Rs. 8,000 crore
    As far as our BD goals, in a couple of BDs we are in quite advanced stage, and we are pretty confident that this number of Rs. 8,000 crores of our guidance we will meet.

    — Atul Bohra, Group CEO

  • BD Geographic Mix Business Development · Ongoing · High confidence 70% Pune, 30% non-Pune
    So Ashish, we have a strategy of 70% for Pune market and 30% for non-Pune market.

    — Atul Bohra, Group CEO

Interest Cost

  • Full Year Interest Cost Interest Cost · FY25 · Medium confidence Rs. 70-80 crores
    Yes, Viraj, I think, as you mentioned, it is in the range of Rs. 70 crores, Rs. 80 crores. That's where we forecast.

    — Atul Bohra, Group CEO

Risks & concerns

  • Project Approval Delays

    medium

    Approval timelines and complexities, especially for redevelopment projects in Mumbai, could push some planned launches from Q4 FY25 to Q1 FY26.

    Management acknowledged

  • Low Margins from Older Projects

    medium

    Analysts repeatedly raised concerns about low margins from older projects impacting overall profitability, which management attributes to specific projects recognized in H1 and expects improvement in H2.

    Analyst acknowledged

  • Impact of Elections on Approvals

    low

    Management acknowledges dependencies on approvals during election periods but does not foresee any adverse policy impact from a new government.

    Analyst acknowledged

Areas of evasion (2)

  • Specific breakdown of FY26 presales from existing vs. new projects
  • Exact names of all new hires beyond CFO

Q&A highlights

2 direct
Q2 FY25 EBITDA Margins and H2 Outlook Direct
As quarter specific, 5.6% of EBITDA and the gross margin stood around 23% for the quarter. As blended EBITDA for H1 stood around 7% and we see that H2 will have higher margin recognition and gradually it will grow. So I would say that there are a couple of projects which is recognized during the quarter, which are of low margin projects.

Analysts questioned the low Q2 EBITDA margin (5.6%) despite higher revenue, and management clarified it was due to low-margin projects recognized in Q2, expecting higher margin recognition in H2 to meet full-year targets.

Asked by Viraj Mehta

Revised Launch Pipeline and H2 Certainty Partial
There are a couple of projects we have reviewed, considering the approval time line, we see that there may be instead of quarter 4, few projects we see may go in quarter 1 of the next financial year. At the same time, in Kharadi, we foresee that, okay, there are certain opportunities of acquiring more land parcels around the project. So the phase that we are launching, we are restricting up to 0.55 million instead of entire phase at one go.

The analyst inquired about the reduction in the FY25 launch pipeline from Rs. 8,000 crore to Rs. 7,000 crore and the certainty of H2 launches (Rs. 5,200 crore) given election and approval challenges, revealing potential delays for some projects into the next fiscal year.

Asked by Biplab Debbarma

Business Development (BD) Pipeline and FY26 Presales Direct
No, we don't foresee because usually, when we close the BD, it's like a journey of 8, 9 months till 12 months for securing all the sanctions. And accordingly, for this financial year, we have not carved out any sales from new BD. At the same time, the launches so far 2.2 million we have launched plus sustenance inventory and upcoming launches will keep us enough inventory for meeting our target. BD is definitely for the next financial year.

The analyst pressed on the perceived slow pace of BD and its implications for FY26 presales, to which management clarified that current BD efforts are primarily for FY26 launches, with existing inventory sufficient for FY25 targets.

Asked by Shreyans Mehta

2 min read 6 chapters

Detailed narrative

Robust Q2 & H1 FY25 Operational Performance

Kolte-Patil Developers delivered a strong operational quarter, achieving its highest ever quarterly pre-sales value of Rs. 770 crore in Q2 FY25, representing a 22% YoY growth. Sales volumes for the quarter stood at 1.03 million square feet. For the first half of FY25, pre-sales value reached Rs. 1,481 crore with volumes of 1.99 million square feet. Collections remained robust at Rs. 550 crore in Q2 and a new high of Rs. 1,162 crore for H1 FY25, underscoring strong cash flow generation.

Financial Performance and Margin Outlook

Q2 FY25 revenue, based on CCM accounting, significantly increased to Rs. 308.3 crores, up 55.55% from Rs. 198.2 crores in Q2 FY24. H1 FY25 revenue, however, was Rs. 649 crores, a decline from Rs. 769 crores in H1 FY24. EBITDA for Q2 FY25 improved to Rs. 16.2 crores (5.6% margin) from Rs. 3.5 crores in Q2 FY24. H1 FY25 EBITDA stood at Rs. 43.9 crores (7% margin). Management expects full-year revenue of ~Rs. 1,800 crore and an EBITDA margin of 11-12%, driven by higher-margin projects being recognized in H2.

Launch Pipeline and Business Development Strategy

The company revised its FY25 launch pipeline GDV to Rs. 7,000 crore, down from an initial Rs. 8,000 crore, primarily due to approval timelines and strategic land parcel acquisitions. Approximately Rs. 5,200 crore of launches are planned for H2 FY25. Despite the revision, management expressed confidence in meeting its FY25 BD target of Rs. 8,000 crore, with new BD primarily contributing to FY26 launches. The BD strategy focuses on a 70% Pune and 30% non-Pune market mix.

Life Republic Township and Pune Market Leadership

The Life Republic township project continues to demonstrate strong sales momentum, with volumes at ~1.03 million square feet in H1 FY25. The project offers a diverse range of inventory from 1 BHK to 4 BHK, row houses, and villas. Management highlighted the significant value-addition opportunity from the pending development potential of 20 million sq. ft. in Life Republic, reinforcing its leadership in the Pune market, particularly in the Hinjewadi micro-market.

Mumbai Market Expansion and Redevelopment Focus

Kolte-Patil is expanding its footprint in the MMR region, having recently launched a project in Sector 2, Vashi, marking its entry into the Navi Mumbai market. The company is actively pursuing redevelopment projects in Mumbai, targeting margins of 16-18% for such ventures. For outright deals, the margin expectation is around 25%, and for joint venture projects, it's 17-18%, indicating a strategic focus on profitable growth in the region.

Debt Management and Finance Cost Optimization

The company reported a strong balance sheet with net debt at a negative Rs. 58 crores as of September 30, 2024. Total interest cost for H1 FY25 was Rs. 31 crores (Q1: Rs. 20 crores, Q2: Rs. 11 crores). Management forecasts full-year interest costs to be in the range of Rs. 70-80 crores. They are actively evaluating opportunities to reduce finance costs, leveraging their Crisil AA-/Stable rating, and securing project-specific and growth capital efficiently.

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