Kolte-Patil Developers Ltd Q3 FY23 Earnings Conference Call Insights

Key highlights from Kolte-Patil Developers Ltd (KOLTEPATIL) Q3 FY23 Earnings Concall

Management Update:

• [00:03:33] KOLTEPATIL said it achieved its highest-ever quarterly sales value and sales volume during 3Q23, backed by 6 new project launches in Pune and Mumbai.

• [00:04:49] Profitability during 3Q23 was impacted by two low-margin projects in Pune, but KOLTEPATIL is confident of closing the year in-line with its stated pre-sales and revenue guidance.

Q&A Highlights:

• [00:11:07] Himanshu Upadhyay at O3 Capital asked about the speed of commercialization of the land-bank in Bombay, and how many and where redevelopment projects are concentrated. Rahul Talele Group CEO said 3 projects in Mumbai are in the sustenance phase and 2 more redevelopment projects were launched in Jan., with a plan to achieve good pre-sales numbers. Negotiations with landowners and societies are ongoing while basic approvals are being sought to close deals faster in future projects.

• [00:13:34] Himanshu Upadhyay at O3 Capital queried about the successful markets, outright sales progress in Bangalore and Mumbai, and price appreciation. Rahul Talele Group CEO answered that KOLTEPATIL is performing well in 3 geographies it’s operating in, in Pune, Mumbai and Bengaluru. KOLTEPATIL has strong BD pipelines in these geographies and expect to close some deals in the coming few months.

• [00:14:44] Himanshu Upadhyay at O3 Capital asked how KOLTEPATIL is trying to improve customer experience in CRM to have more reference sales. Rahul Talele Group CEO replied that KOLTEPATIL has increased its referral sales from 3-5% two years ago to 15% in the last nine months due to initiatives such as customer engagement activities and digital platforms.

• [00:17:35] Pritesh Sheth from Motilal Oswal enquired that on the P&L, what projects were recognized for revenue in 3Q23. Rahul Talele Group CEO answered that in 3Q23, the Wakad project; Western Avenue and Green Olive had the highest revenue recognition. There were low margins for this project, but multiple other projects have been completed in the last few months with estimated GP of 30-40% and EBITDA of 20-25%. These margins are in line with the targets.

• [00:22:34]  Rohit from iThought PMS enquired if the guidance of recognizing revenue of INR 1,300-1,500 crores in 2H23 still stands and if there have been any changes to that guidance. Rahul Talele Group CEO replied that the company will deliver as per the guidance given earlier. All of the revenue from the orders received in last 45 days will be recognized in 4Q23.

• [00:23:49] Rohit from iThought PMS asked about the GM outlook with the ongoing and the last six month launches. Rahul Talele Group CEO answered that KOLTEPATIL is expecting margins of plus minus 35% in the range of 30-40%, depending on the deal structure. And EBITDA margins in the range of 20-25%.

• [00:26:32] Rohit from iThought PMS enquired if there is any plans to foray into the retail space. Rahul Talele Group CEO answered that the company has no plans to foray into retail.

• [00:29:27] Parikshit Kandpal of HDFC asked about the nine-month new business development agreed with partners or land owners and the pipeline for 4Q23. Rahul Talele Group CEO replied that the company has a potential of around INR 15,000 crores in its existing land bank and is working on multiple business deals which should be concluded in the next few quarters.

• [00:38:08] Viraj Mehta from Equirus PMS asked about the kind of realization increase seen in Pune and Mumbai. Rahul Talele Group CEO said the realization per square foot depends on which projects have been sold the most and this quarter, a lot of inventory was sold at Life Republic, which is a MIG product, so the realization is lower. For the upcoming year, KILTEPATIL is expecting a realization range of INR6,600-6,800.

• [00:44:02] Aejas Lakhani from Unifi enquired when the Marubeni cash flow is expected to be received and if that will be used for the BD expenses for land of INR400-450 crores. Rahul Talele Group CEO answered that KOLTEPATIL plans to use the cash flow as growth capital for the company and are in the final stages of approvals. KOLTEPATIL expects to have everything finalized in the next couple of months.

• [00:46:20] Dhananjay Kumar from Sunidhi Securities asked about the 2.7 million sq. ft. delivery if it’s for full year or it’s already delivered. Rahul Talele Group CEO said that KOLTEPATIL has already received 2.7 million sq. ft. of OC, and it expects to receive more in the next 1 month. This is expected to generate INR 1,600 crores of revenue in FY23.

• [00:51:10] Dhwanil Desai from Turtle Capital asked about monetizing LR and increasing presales, as well as what kind of launches to consider. Rahul Talele Group CEO said Life Republic has launched projects totaling INR3,000 crore, and achieved 1.1 million sq. ft. KOLTEPATIL is confident it will launch more projects, both in the premium and affordable segments, with a better price realization, and achieve 1.5-1.6 million sq. ft. YonY.