Kolte-Patil Developers Limited IPO Message Board (Page 44)

FROM-BUSINESS STANDARD. ITS A RISKY INVESTMENT

Pune’s realty boom has spread its wings far and wide across the city, with real estate players like Kolte Patil Developers focusing on the geography.

Kolte Patil has completed construction of around 4 million sq ft of residential, commercial and IT park projects in Pune city in its 16-year history. It also has a small presence in prime locations of Bangalore.

The company now proposes to raise between Rs 237-275 crore for its expansion in Pune and Bangalore, via an IPO. The price band for the issue is fixed at Rs 125-145 a share, with 19 million shares on offer.

The issue constitutes of 25.25 per cent of the company’s fully diluted paid-up equity capital.

Kolte Patil boasts of impressive project-specific joint ventures with ICICI Ventures and K2 Property, a subsidiary of Yatra Capital, which is an AIM-listed realty fund. In order to make a foray into the hospitality sector with serviced apartments, it has tied up with UK-based Arora International, to run its hotels.

Financially, the company has shown a consistent growth over the past four fiscals, albeit with a larger than normal spike in revenues and profits in FY07.

Profitability too, has risen dramatically, as its operating margins which have ranged between 8-12 per cent over FY03-FY06, have gone up to 40 per cent in FY07.
NUMBER NUGGETS
Rs crore FY07 FY08E FY09E
Revenues 230.3 300 345
Operating profit 108.3 135 155.25
OPM (%) 47 45 45
Net profit 83.6 105 120
NPM (%) 36.3 35 34.7


Going forward, the company aims to develop a saleable area of about 18 million sq ft of residential, commercial, IT park and serviced apartments, by FY10.

Including this area, the company claims to have land reserves of a saleable area of over 39 million sq ft. However, less than four per cent (Rs 10 crore) of the price of this land (Rs 286 crore) has been paid for, and the rest is to be funded from the proceeds of the issue.

Further, due to a number of partnerships and JVs, the company would be entitled to book revenues for only about 13 million sq ft of its total land reserves on a pro-rata basis.
TOO FAR, TOO WIDE
Land reserves
as per RHP
Out of which
fully owned

Residential 34.1 8.8
Commercial 1.9 1.8
IT Parks 3.1 2.33
Serviced Apartments 0.026 0.013
Total 39.13 12.94
Saleable area in million sq ft


Add to this, execution remains a prominent risk, as the company has developed only about 4 million sq ft over 16 years in the past, and it plans to develop 18 million sq ft over the coming three years.

Again, the concentration in one city, with over 90 per cent of the saleable area in Pune too, leaves the company vulnerable to shifts in real estate prices.

The company still has a lot to accomplish, starting from acquisition of a sizeable land-bank on its own and expanding beyond just one or two cities, to a stable operating performance financially. Investors may skip this issue, for the markets offer many a better alternative.

Do not subscribe due to 2 reasons
1. I have never heard of it and i dont think its a good company.
2. Second and most important, Bigshare is the registrar.

relpower on 5th dec is a pure bakwaas. it will be hitting the market from 15th to 18th.100%

For FY2007 working of the company is good but for the earlier years it not so.It is confusing whether one should applyfor it or not?

Do not subscribe. Not a good company.

hello friends heard that Bigshare will not refund amnt in
time.so i think its better not to apply this n wait for reliance power.
kindly let me know ur views.

Weaknesses

Of the land parcels aggregating 54.50 million square feet in Pune and Bangalore, just about 0.51 million square feet of land is owned. This translates into just around 1% of the total land reserves. Sole development rights vested on approximately 27.39 million square feet or approximately 50% of the total land reserves. Around 26.34 million square feet or about 48%, of total land reserves consists of land subject to memoranda of understanding, agreements to acquire or letters of acceptance and also involve subsidiaries and/or group companies.

Geographically, operation is strong in and around the Pune realty market with marginal presence in Bangalore and thus vulnerable to supply glut and downturn in the Pune realty market.

Follows project completed contract method of accounting. This method is susceptible to wide swings in reported profit, not only quarterly but even on a yearly basis as projects typically take more than a year to complete. Under this method revenue and expenses on long-term project are recognised in the period in which the project is completed. The loss, however, is recognised in the year of occurrence. When the project runs over a number of accounting periods, revenue earned in a given period is recognised on the basis of possession given to the buyer.

The year ending March 2007 (FY 2007) seems to be an exceptional year, with impressive surge in revenue, margin and profit: Rs 106.40 crore were realised from sale of IT space at Giga Space IT Park and Rs 61.77 crore from sale of land to the special purpose vehicle (SPV) formed for the JV with Yatra Capital. Ability to sustain such high growth in view of changing market dynamics in select micro markets is a constraint.

Only two projects are eligible for benefits under Section 80IB of Income-Tax Act, 1961, which provides tax benefits for projects approved before March 2007. But eligible for Section 80 IA benefits for IT parks developed. Nevertheless, tax incidence can go up.

Valuation

The offer price of the issue is Rs 125-Rs 145. On the basis of FY 2007 earning on diluted equity (Rs 9.1), P/E works out to 13.7-15.9 at the lower and upper price band. Pune-based D.S. Kulkarni Developers trades at FY 2009 P/E of 16.5.
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I have stayed in karnataka for more than 15 years and this is the first time i am hearing the name of this company.

Hi All,
Have been hearing from lot of brokers (also personaly believe) that this issue is not much preferable vis-a-vis edelweiss.
Also application money is not expected to be refunded before the open of the Reliance Power IPO.
Also the Reliance Power IPO being huge, chances of more shares being allotted stands good.

Best Regards,
KSR.

Hi all,
The real estate sector will only dip and dip.Wait for Rel Power.Save your money for bigger things.RPL expected around 5th dec.Refunds from Kolte may not be on hand.Don't get caught in a money jam.Have patience.Apply full for RPL.Remember rel petro.

good ipo 125-150 premium, allotment chanses are good,great growth rate of company, nice land reserve and ongoing projects....overall dont miss it

pls tell me this ipo wrong or right and what would be listing price this ipo

Can someone post the fundamentals of the company? current PE,expected PE,comparable PE etc.

Sir pls Tell me This IPO is good for our Helt and Welth bcoz i m new in this field

avoid this ipo. only 15 gmp . go to edweliss capital

How much is land bank available with Kolte Patil?

As other Biggies in this sector have 100s of acres of land bank. Even DSK. also...

listen all
this is very good issue interms of real estate because i m staying in pune and i know the tatus of this company in pune,
this is a very bigg and biggggggg biulder in pune they have very big plan for development in pune and also having may typs of land.
i would suggest to all of u go for it for longterm pruspective,

kolte gmp is 145-160

Hello , IpoRaja , can you plzzz post the latest GMP for
Kolte Patil.....

Thanks

who many shares a person get in full lot.