WAIT FOR DEVELOP MENT
MAX. ISSUE SIZE (Rs) : 276 crores
PRICE BAND (Rs) : 125 - 145
ISSUE OPENS/CLOSES : 19th-- 22nd November, 2007
LISTING : BSE, NSE.
Kolte-Patil Developers (KPDL) is a prominent Pune based realty player with a couple of projects under development in Bangalore. It now proposes to expand its geographies. The IPO objectives include funding land acquisition besides development and construction of existing properties.
KPDL is also driving its business through joint ventures with ICICI Venture, K2 Property and the UK based Arora International Hotels.
The primary concern that surrounds this IPO revolves around the fact that whereas land parcels aggregating 54.50 million square feet in Pune and Bangalore have been projected, barely 0.51 million square feet of this land is owned. Notably, this is less than 1 per cent of the total land reserves.
Furthermore, around 26.34 million square feet or about 48%, of total land reserves comprises land subject to agreements to acquire or letters of acceptance.
Then, the 90 per cent project concentration in the Pune realty market renders KPDL vulnerable to any concentrated real estate price downswings in that region.
The positives include a decade and a half long good track record in the Pune realty market. Its recent track record of having developed and constructed 25 projects approximating 4.01 million square feet of saleable area by the end of September 2007 is also impressive.
Besides, KPDL’s projects which were historically in the residential realm has now traversed into the more lucrative commercial segment.
The financials appear satisfactory with a big bang upswing in topline, margins and bottomline. A closer scrutiny though, indicates that this is a fallout of the company’s project completed contract method of accounting. Resultantly, revenues and expenses on long-term projects are recognized in the period in which the project is completed.
At a historical fully diluted P/E multiple of 16, the company is priced on par with DS Kulkarni. The argument that KPDL is a qualitatively better bet can be debated, but those favouring an investment in this IPO will need to be risk-takers with patience.
MAX. ISSUE SIZE (Rs) : 276 crores
PRICE BAND (Rs) : 125 - 145
ISSUE OPENS/CLOSES : 19th-- 22nd November, 2007
LISTING : BSE, NSE.
Kolte-Patil Developers (KPDL) is a prominent Pune based realty player with a couple of projects under development in Bangalore. It now proposes to expand its geographies. The IPO objectives include funding land acquisition besides development and construction of existing properties.
KPDL is also driving its business through joint ventures with ICICI Venture, K2 Property and the UK based Arora International Hotels.
The primary concern that surrounds this IPO revolves around the fact that whereas land parcels aggregating 54.50 million square feet in Pune and Bangalore have been projected, barely 0.51 million square feet of this land is owned. Notably, this is less than 1 per cent of the total land reserves.
Furthermore, around 26.34 million square feet or about 48%, of total land reserves comprises land subject to agreements to acquire or letters of acceptance.
Then, the 90 per cent project concentration in the Pune realty market renders KPDL vulnerable to any concentrated real estate price downswings in that region.
The positives include a decade and a half long good track record in the Pune realty market. Its recent track record of having developed and constructed 25 projects approximating 4.01 million square feet of saleable area by the end of September 2007 is also impressive.
Besides, KPDL’s projects which were historically in the residential realm has now traversed into the more lucrative commercial segment.
The financials appear satisfactory with a big bang upswing in topline, margins and bottomline. A closer scrutiny though, indicates that this is a fallout of the company’s project completed contract method of accounting. Resultantly, revenues and expenses on long-term projects are recognized in the period in which the project is completed.
At a historical fully diluted P/E multiple of 16, the company is priced on par with DS Kulkarni. The argument that KPDL is a qualitatively better bet can be debated, but those favouring an investment in this IPO will need to be risk-takers with patience.
