Kolte Patil Developers is entering the capital market on 19th November, 2007 with a public issue of 1.90 crore equity shares of Rs.10 each in the band of Rs.125 to Rs.145 per share. The issue size at the upper band is Rs.275 crores with 25% dilution of expanded equity base of Rs.75.25 crores.
The company is a leading realty player in Pune market and out of total saleable area of 39.78 million sq. ft., 92% is located in Pune while 8% is in Bangalore. Both are hot and rising market for realty where saleability of the property is fast with good demand from middle and upper class of users.
28 projects with saleable area of 17.80 million sq. ft., of which 24 are in Pune and 4 are in Bangalore, are under development, which includes 5 IT Parks, 11 commercial complexes, 10 residential complexes, 1 service apartment and 1 integrated township. Balance area of 21.58 million sq. ft. is held for development.
The company has joint venture agreement with ICICI Venture Fund Management for three of its projects with equity and equity linked financing for the projects. This shows that the project and the company has been duly checked and verified which instill confidence.
The company has agreed to acquire 24 million sq. ft. of land in Pune where the cost of acquisition ranges from Rs.750 per sq. ft. to Rs.7 per sq. ft. The total cost for these lands are Rs.287 crores, of which, Rs.110 crores has already been paid, while remaining Rs.176 crores is mobilized via this issue. Bavdhan 3, a residential project has saleable area of 9.75 lakh sq. ft., which is in the vicinity of Bavdhan 1 and 2, where the company is developing an IT Park, of about 4 lakh sq. ft. Due to this project, residential project would have good demand, from ownership and rental.
For FY 07, the company achieved a total income of Rs.252 crores and PAT of Rs.83.56 crores, resulting into an EPS of Rs.14.85. The debt of Rs.150 crores is also not very high, considering its land bank.
The expanded equity of Rs.75.25 crores translates into a valuation of Rs.1,100 crores at the upper band. Saleable area of 39 million sq. ft. translates into weighted average value per sq. ft. of Rs.282. The same looks quite reasonable and good profits can be made by the company after development. Even, amount to be mobilized, from the issue would get partly used for development and construction of Rs.149 crores and balance Rs.176 crores shall be usd for making payment, for acquiring development rights.
Considering all these, issue looks reasonably priced, even at the upper band and hence investment is recommended.