Kolte Patil Developers - On Track; Result Update Q2FY15 :: Edelweiss, PDF link

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Kolte-Patil Developers’ (KPDL) Q2FY15 revenue was largely in line with our estimate. However, EBITDA margin at 26.5% missed our 28.6% estimate on account of increased selling and marketing expenses as well as employee costs. However, with revenues set to rise, margins should normalise in H2FY15. During the quarter, operations remained healthy coming in at 0.6msf for INR3.4bn. We expect sales momentum to be maintained in H2FY15 led by new launches. We expect sales bookings to rise to 2.4msf in FY15 and 3.7msf in FY16 from 2.2msf in FY14. We like KPDL for its strong execution, low leverage, attractive line up of high-visibility projects and pole position in the Pune real estate market.

Rise in selling, personnel expenses results in margin miss

KPDL reported revenues of INR1,579mn, largely in line with our estimates. EBITDA margin however, disappointed coming in at 26.5% versus our 28.6% estimate, impacted by higher selling and marketing expenses and employee costs. Thus, EBITDA and PAT at INR418mn and INR127mn came in 13% and 36% below our estimates, respectively. However, owing to an expected increase in revenues led by commencement of revenue recognition in six projects (Kondhwa, Bavdhan, Giga residency, Jazz last phase, Life republic R-III, Ivy estate II), margins should normalise in H2FY15.

Operations on track

Sales bookings were steady sequentially at 0.6msf for INR3.4bn and were up 33% YoY. We expect the sales momentum to be maintained in H2FY15, led by new launches. In terms of cash collections, the company has shown a marginal sequential improvement to INR2,007mn. However, the same is down 25% on a YoY basis. We expect the same to improve going forward as sales from new launches pick up.

LINK

https://www.edelweiss.in/research/Kolte-Patil-Developers--On-Track;-Result-Update-Q2FY15/27305.html