Kolte-Patil Developers Limited Gets Awarded as India’s Most Admirable Brand

Kolte-Patil Developers Ltd. (KDPL) is truly asset-light. KPDL has offered consistent growth with low leverage and no dilution. While the industry faced severe challenges, for KPDL in the last four years (from FY17-20) PAT grew from ₹87 crore to ₹137 crore, revenue grew from ₹965 crore to ₹1,226 crore, collections grew from ₹965 crore to ₹1,368 crore (highest ever in Company history). Further, KPDL sold between 2.1-2.7 msf annually.

At a time when the real estate sector slowed, one of the most prominent fallouts was a decline in construction speed and apartment handover. Kolte-Patil emerged as a prominent contrarian. The Company sustained the high pace of construction and delivered 7,452 apartments amounting across 9.5 msf in the four years ending FY20. While the company achieved noteworthy growth across operational and financial parameters, there was no increase in Net Debt, in fact, it reduced during FY20. Further, during 9MFY21, Net Debt reduced by ₹71 crore. Net debt to equity stood at 0.29x in 9MFY21. KPDL has an A+/Stable rating by CRISIL—one of the highest amongst residential real estate players.

The resilient resist shocks and stay the same; the anti-fragile get better. The pandemic necessitated companies to be adaptive, innovative, and transformative. KPDL stepped up its digital sales, CRM and marketing platform; and labourer sourcing initiatives.

KPDL has reached pre-Covid quarterly sales and construction run rate. Buyer interest is getting more widespread driven by increasing site visits and virtual interactions and the current traction is expected to sustain. Q3FY21witnessed expected improvement in sales momentum that will allow the Company to achieve the stated guidance of 1.8 msf for FY21. Q3FY21 was the best ever quarter for KPDL in terms of collections—highest ever in the company’s three-decade history. On a sequential basis, collections have nearly doubled signaling the turnaround in the ecosystem where sales, registrations, construction, and CRM are all functioning optimally. The month of January has seen collections at ₹160 crore, which is the best ever monthly number.

Business Development opportunities have improved, judicious capital allocation remains key. Ever since the beginning of the lockdown, the company has made immense progress. Recently, KPDL added three new projects with a combined saleable area of 2.2 msf under revenue share and profit share structures which will strengthen its market share in Pune. The expected Total Topline from these projects is ~₹1,500 crore and KPDLPBT is of ~₹220 cr, which will further improve ROCEs. KPDL is focused on meaningful (both in terms of area and value) additions to its portfolio across Pune, Bengaluru, and Mumbai in the coming quarters. Capital light, deferred payment structured transactions with a low debt balance sheet like KPDL has ensured profitable growth, positive operating cash flows, and healthy ROCE and IRR. Over the last four years, the company has delivered superior ROCEs, averaging >15.

KPDL’s business is built on high standards of governance and is professionally driven. With a committed promoter group and a prudent approach, KPDL operates with a manufacturing and services mind-set rather than a typical real estate developer. The brand equity of this company continues to rise. Innovation, superior execution, quality, and sustainability are synonymous with the brand Kolte-Patil. The company stays ahead of the curve through investments in construction-accelerating and quality focussed global technologies from Korea, Italy, Germany, and Japan. The company was one of the first in India’s real estate sector to implement advanced CRM SAP-based ERP. Further, it fostered financial partnerships with several marquee investors—KKR, JP Morgan Asset Management, Portman Holdings, ASK Capital, Motilal Oswal, and ICICI Ventures.

KPDL has a history of both tangible and intangible value creation. A recent example of this is the 390-acre township, Life Republic, a landmark destination in western Pune with best-in-class physical and social infrastructure. Within a year of the buyout of economic interest, the project achieved multi-year sustainability while generating more than 1 msf in sales in successive years, validating its long-term momentum.

KPDL’s product portfolio is well-insulated - both geographically and segment-wise diversified. It is present in affordable, MIG, luxury, villas, townships, redevelopment, office, and retail segments. As a dominant player in Pune’s real estate; the company has delivered 3X bookings growth in Bangalore and added several redevelopment projects in Mumbai.

Going forward, KPDL sees the structural demand theme of the sector developing on the back of several drivers. A combination of low-interest rates, lack of appreciation in inflation has adjusted home prices while improving affordability. The Government and the Central Bank also helped the real estate cause by reducing stamp duties from 5% to 2%-3% and development premium by 50% and allowing one-time restructuring of personal loans (including home loans).

KPDL is focused on thriving, not merely surviving. Towards the end of December, a project was launched in Pune and Mumbai. Evara, at Borivali has received strong interest from Mumbai buyers. The company has launched a new project named ‘Universe’ in the Life Republic Township, Pune with an amazing initial response. In the next few quarters, the company will have a strong pipeline of new launches with an aggregate potential sales area of ~5.9msf and a top-line potential of ~₹5,200 crore drawn from eight launches in Pune, two in Mumbai, and one in Bengaluru. With Evara at Borivali, Jai Vijay at Vile Parle, and two new launches Hari Ratan, Goregaon, and Sagar Vaibhav, Dahisarthe coming quarters will see an increased contribution from the Mumbai portfolio.

Over the longer term, the company aims to be one of the top five real-estate players in India crossing the 5 million sq ft sales mark.

The Brand Story acknowledges the noteworthy efforts made by KPDL in creating a niche in the real estate sector. Mr. Abhay Kaushik, Editor in Chief and Director, The Brand Story said, “KPDL has proven itself as one of the most resistant real estate companies in India because of its self-sustaining business model that maintains a constant cash flow at all times. KPDL’s focus on thriving and not just surviving is inspirational and noteworthy. The Brand Story is proud to honour KPDL as India’s Most Admirable Brand.”