Righttime,ride time?
Over last 3M Kolte Patil (KPDL) has outperformed CNX Realty index by
15% still the stock trades at 23.4% discount to its average cross‐cycle
multiple. With new approvals of ~7mn sqft standing at horizon we believe
KPDL is looking at FY15‐16E high‐rise. We roll forward our valuation
estimates to FY15E end and incorporate some new projects into our model.
We maintain our BUYstance with increased NAV of Rs160/share.
Fat approvals pipeline lends – visibility to FY15‐16E launches
KPDL has projects encompassing ~1.1mn sqft saleable area in final
Environmental Clearance (EC) approval phase (expected by 4QFY14E).
Besides ~5.1mn sqft of EC approvals are expected by 1QFY15E. KPDL has
been awaiting new approval since past Jul‐13 and these projects are now in
the final EC appraisal leg. With limited on hand inventory of ~1.5mn sqft,
KPDL is awaiting EC clearances for next leg of growth.
New Townships,Mumbaiforay ‐ may add upto Rs79/share optional value
We expect new Township & Mumbai foray to add about Rs79/share optional
upside to our NAV estimate. The Sanjivani Township project with ~15mn
sqft saleable area has been certified as ‘Green building’ and is currently being
evaluated for EC (can add about Rs21/share to SOTP). Increase in FSI in
township may add Rs44/share and Mumbai foray may add Rs15/share to
SOTP.
Strengthening management bandwidth, improving transparency
KPDL has taken multiple initiaives to improve productivity (i) tied up with
IBM to automate operations and improve margins (ii) hired laterals &
freshers from A‐Grade professional schools to increase management
bandwidth & (iii) changed auditors to Deliotte Haskins to improve
transparency. Besides an investor friendly dividend policy is already in
place. This is a part of overall strategy to be a market leaderin Pune and gain
traction in newer markets.
Maintain BUY: NAV increased to Rs160/share
We maintain our BUY stance on KPDL with an increased SOTP‐based target
price of Rs160/share (previous target Rs140/share). Our valuation is based on
0.9x our end‐FY15E NAV forecast. We have marginally cut our headline
numbers to factorin lagged launches. At CMP the KPDL trades at 4.1xFY16E
EPS and offers ~4.8% dividend yield. Key triggers: (i) success of new
launches (ii) faster pace of project approvals (~7mn sqft).
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Over last 3M Kolte Patil (KPDL) has outperformed CNX Realty index by
15% still the stock trades at 23.4% discount to its average cross‐cycle
multiple. With new approvals of ~7mn sqft standing at horizon we believe
KPDL is looking at FY15‐16E high‐rise. We roll forward our valuation
estimates to FY15E end and incorporate some new projects into our model.
We maintain our BUYstance with increased NAV of Rs160/share.
Fat approvals pipeline lends – visibility to FY15‐16E launches
KPDL has projects encompassing ~1.1mn sqft saleable area in final
Environmental Clearance (EC) approval phase (expected by 4QFY14E).
Besides ~5.1mn sqft of EC approvals are expected by 1QFY15E. KPDL has
been awaiting new approval since past Jul‐13 and these projects are now in
the final EC appraisal leg. With limited on hand inventory of ~1.5mn sqft,
KPDL is awaiting EC clearances for next leg of growth.
New Townships,Mumbaiforay ‐ may add upto Rs79/share optional value
We expect new Township & Mumbai foray to add about Rs79/share optional
upside to our NAV estimate. The Sanjivani Township project with ~15mn
sqft saleable area has been certified as ‘Green building’ and is currently being
evaluated for EC (can add about Rs21/share to SOTP). Increase in FSI in
township may add Rs44/share and Mumbai foray may add Rs15/share to
SOTP.
Strengthening management bandwidth, improving transparency
KPDL has taken multiple initiaives to improve productivity (i) tied up with
IBM to automate operations and improve margins (ii) hired laterals &
freshers from A‐Grade professional schools to increase management
bandwidth & (iii) changed auditors to Deliotte Haskins to improve
transparency. Besides an investor friendly dividend policy is already in
place. This is a part of overall strategy to be a market leaderin Pune and gain
traction in newer markets.
Maintain BUY: NAV increased to Rs160/share
We maintain our BUY stance on KPDL with an increased SOTP‐based target
price of Rs160/share (previous target Rs140/share). Our valuation is based on
0.9x our end‐FY15E NAV forecast. We have marginally cut our headline
numbers to factorin lagged launches. At CMP the KPDL trades at 4.1xFY16E
EPS and offers ~4.8% dividend yield. Key triggers: (i) success of new
launches (ii) faster pace of project approvals (~7mn sqft).
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