Kolte-Patil Developers Gets A New 'Buy' As Motilal Oswal Initiates Coverage
In over three decades of presence, Kolte-Patil delivered 26 million square feet of projects, says Motilal Oswal.
Kolte-Patil Developers Ltd. received a new 'buy' rating from Motilal Oswal Financial Services Ltd. citing the real-estate developers' track record in profitability and cash flow supporting future growth. It set a target price of Rs 700 per share, implying a potential upside of 35.27% in comparison to the previous close.
Kolte-Patil is looking to achieve a pre-sales compound annual growth rate of 25% in the medium term. The robust project pipelines, and a strong balance sheet will support the company to target new projects, and retain growth trajectory, Motilal Oswal said in a note on Wednesday.
The company is one of the leading real-estate developers in Pune, with a growing presence in the Mumbai Metropolitan Region and Bengaluru markets. In over three decades of presence, Kolte-Patil delivered 26 million square feet of projects, with 43 million square feet projects in the pipeline at various stages, the brokerage said.
Inability to get new projects and slow demand are some of the key risks to its growth outlook, it said.
Key Takeaways
Motilal Oswal has initiated coverage on Kolte-Patil with 'buy' rating, and set the target price Rs 700 apiece, implying a 35.27% upside from Tuesday's closing price.
The company has delivered 26 million square feet of space in the last three decades and has 43 million square feet under development.
Balance sheet has strengthened to net cash in December 2023.
Strong pipeline and balance sheet strength is expected to push growth.
The real-estate developer has delivered 36% pre-sales CAGR over FY21–23, following a stagnant decade.
Kolte-Patil's priority launches is to sustain the near-term growth momentum.
Profitability is likely to improve with a lag. It expects Kolte-Patil to report a 21% Ebitda CAGR over FY23–26.
Risks include inability to add new projects and slowing demand.
Shares of Kolte-Patil jumped as much as 10.07% to the highest level since Jan. 11, before paring gains to trade 7.76% higher at 10:45 a.m. This compares to 0.27% advance in the NSE Nifty 50.
The stock has gained 105.53% in the last 12 months. The total traded volume so far in the day stood at 31 times its 30-day average. The relative strength index was at 73.40, implying the stock was overbought.
Six analysts tracking the company have a 'buy' rating on the stock, according to Bloomberg data. The average of 12-month analyst price targets implies a potential upside of 20.3%.
