Kolte-Patil shares jump 8% after Motilal Oswal initiates coverage

Steady performance, healthy balance sheet, robust growth in the Mumbai Metropolitan Region (MMR) and a strong pipeline to propel growth can be attributed to ’s positive outlook on the realty stock.

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As per a report, during the fiscal years 2021 to 2023, KPDL experienced a notable resurgence following a period of stagnation, achieving a commendable 36% CAGR in pre-sales, which primarily can be attributed to several strategic factors, including an enhanced demand landscape post-Covid, an expansion in the number of launches for society redevelopment projects within the MMR, and the implementation of a diversified product approach within its township endeavor, 'Life Republic'.

Notably, these initiatives, particularly heightened focus on Pune, facilitated a substantial increase in pre-sales, reaching a milestone figure of Rs 2,200 Crore over the aforementioned fiscal period.

“After a decade of muted performance, KPDL has experienced robust growth in pre-sales and with a strong pipeline in place, it is anticipated that the company can sustain a 25% CAGR in pre-sales for at least the next two years, with potential for further growth through new project additions,” the broker said.

Analyst Pritesh Sheth of Motilal Oswal further said, ”The sustainability of this growth hinges upon KPDL's ability to secure new projects, supported by increased business development activity and a solid balance sheet. The company's consistent margins and cash flows suggest that future growth will be bolstered by profitability and effective execution.”

Valuing KPDL's existing pipeline and planned project additions for FY24 using a net present value (NPV) approach, a fair value of Rs 700 is estimated, indicating a potential upside of 34% by the research firm.

Key downside risks include the inability to secure new projects as intended, which could impede future growth, as well as any slowdown in demand, resulting in reduced pre-sales estimates and diminished spending on new project acquisitions.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)