Kalpataru Limited
IPO Size: Rs. 1,590 cr, Entirely Fresh Issue
- To repay Rs. 1,193 cr debt, of Rs. 8,820 cr net debt
Price band: Rs. 387-414 per share
M cap: Rs. 8,524 cr, implying 19% dilution
- Only 10% for retail, as company posted losses between FY22 to FY24
IPO Date: Tue 24th Jun to Thu 26th Jun 2025, Listing Tue 1st Jul 2025
Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.
Western Maharashtra based Realtor
Kalpataru Limited develops residential projects in Mumbai, Thane and Pune, with 16 million square feet (mn sq ft) completed projects. It has 25 mn sq ft in ongoing projects, 16 mn sq ft forthcoming and 8 mn sq ft planned projects, all in similar geographies of MMR (Mumbai Metropolitan Region) and Pune.
But Low Realisation
Company’s 9MFY25 average realization of Rs.13,300 per sq. ft. is below geography average of Rs.15,000 per sq ft, being much lower than suburban-Mumbai focused realtors like Arkade (Rs. 31,000), Keystone (Rs. 17,900) and is closer to Bengaluru and NCR players like Prestige (Rs. 14,000), Signature Global (Rs. 12,500), Godrej (Rs. 11,400).
Margin Improves, yet trails Peers
Company sold 2.05 million sq. ft. in 9MFY25, clocking booking value of Rs.2,727 cr vis-à-vis FY24’s Rs. 3,202 cr. 9MFY25 revenue stood at Rs. 1,625 cr with adjusted EBITDA of Rs. 516 cr, implying 32% adjusted EBITDA margin, as most projects are on owned land (without a partner). While margin has improved from FY24’s 23%, it remains lower than peers like Godrej (53%), Prestige (35%), Signature (35%).
High Debt, even post IPO
In March 2025, promoters converted compulsory convertible debentures (CCDs) worth Rs. 1,440 cr into equity, at Rs. 517 per share. However, this conversion price is not important and more for the optics, as company is 100% owned by promoter.
Post conversion, net debt stands at Rs. 8,820 cr, of which, just about Rs. 1,193 cr is proposed to be repaid from IPO proceeds. This will reduce net debt to 7,630 cr, but net debt to equity ratio will remain elevated at 1.7:1, on post issue networth of Rs. 4,600 cr.
The cost of quite a lot of this debt is as high as 18% IRR. In addition, key subsidiary Agile, developing Thane Parkcity township, comprising ongoing projects of 5.5 mn sq ft and forthcoming projects of 12.6 mn sq ft, is rated ‘C’ by CARE. Such a poor credit rating is unlikely to ease the cost of borrowing.
Unattractive Pricing
Expected market cap is Rs. 8,524 cr on upper price band, with enterprise value (EV) of Rs. 16,150 cr. On FY25 an expected booking value of over Rs. 4,200 cr, EV/booking multiple is close to 3.5x with an EV/EBITDA multiple of around 23x. This is makes the share fully valued, especially in the short term, given DE ratio of 1.7:1 post IPO, low realisation and peers ruling at similar or lower multiples.
- Keystone Realtors has an EV of Rs. 7,000 cr, with negligible debt, Rs. 470 cr EBITDA and 41% rise in pre-sales in FY25, implying EV/booking multiple of 2.3x and EV/EBITDA of 15x
- Gurugram-based Signature Global, with similar realization as Kalpataru but higher EBITDA margin of 35% and lower net debt to equity ratio of 1.2:1, is ruling at an EV/booking multiple of 1.8x and an EBITDA multiple of 21x
- Arkade, with not much debt, has Rs. 3,700 cr EV for Rs. 200 cr EBITDA, implying an EV/EBITDA multiple of 18x
- Godrej Properties, with presence in Delhi-NCR, Mumbai, Bengaluru, 0.2:1 net debt equity ratio, is ruling at EV/booking multiple of 2.6x despite 31% rise in bookings (on a high base) to Rs. 29,440 cr in FY25.
23rd Jun 2025 at 06:49 am