| Kolte-Patil Developers Limited | ||||||
| Rating outlook revised to 'Positive'; 'CRISIL A+/Positive' assigned to Non Convertible Debentures | ||||||
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| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has revised its rating outlook on the long-term bank facilities and existing non convertible debentures of Kolte-Patil Developers Limited (KPDL; flagship company of the KPDL group) to ‘Positive’ from ‘Stable’ while reaffirming the rating at ‘CRISIL A+’. CRISIL Ratings has also assigned its ‘CRISIL A+/Positive’ rating to the Rs.113.65 crore Non Convertible Debentures of KPDL. The rating on short term bank facilities has been reaffirmed at 'CRISIL A1'.
The revision in outlook reflects sustenance of improvement in KPDL’s business risk profile over the medium term. This improvement will be driven by strong saleability in the ongoing projects and a significant launch pipeline, the value sold is expected to increase ~25% from fiscal 2023 while maintaining the low debt levels. The revenue diversity is expected to strengthen further with an increase in launches in the non- Pune market which will increase the sales to around 30% from non-Pune region by fiscal 2025 up from 20% in fiscal 2023.
The company had achieved all time high sales and collections of Rs 2232 crore and Rs 1902 crore respectively in FY2023, which is a healthy 28% growth respectively in sales value and collections over FY2022. Launch pipeline for FY2024 stands at healthy levels of 7 msf, company has launched 2.73 msf in Q1FY2024.
Financial risk profile remained strong in fiscal 2023 and it is expected to remain healthy in the medium term, with total debt (including NCDs) to assets likely to remain ~16% in fiscal 2024. Composition of debt will include 53% as long-term bank/NBFC debt and remaining in the form of NCDs, the payment of which is linked to collections in the underlying projects. KPDL has partnered with some marquee investors for its projects and has onboarded Marubeni Corporations and Motilal Oswal.
The ratings continue to reflect the KPDL group’s established track record of over three decades and strong brand and market position in Pune market, healthy salability of the projects and healthy collections. These strengths are partially offset by geographical concentration in revenue and exposure to risks and cyclicality inherent in the real estate sector. |
Analytical Approach CRISIL Ratings has combined the business and financial risk profiles of all ongoing and planned projects in KPDL, its subsidiaries and associate companies. All the entities, collectively referred to as the KPDL group, are in the same business, have common promoters and share significant operational, managerial and financial linkages.
Please refer Annexure - List of entities consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strengths: Strong brand and established market position in Pune market: The group is a prominent developer in Pune, with a healthy track record of over three decades in the real estate business. The group has developed over 26 msf in the residential sector. Strong position is evident from its established brand, and the healthy market share of 7-8% in Pune, considering the high fragmentation in the real estate industry. The group has expanded its presence through development projects in Mumbai and Bengaluru. The collections are expected to grow by ~15% in FY2024 and ~20% in FY2025.
Comfortable financial risk profile: The company has healthy salability and profitability across all the ongoing projects. Further, KPDL’s ability to accelerate the collections through healthy sales at the launch of any project reduces the dependence on external funding. Healthy collections duly supported the debt coverage indicators marked by healthy total debt (including NCDs) to assets of 14% in fiscal 2023. Going forward, it is expected to remain comfortable around the same level. KPDL has a launch pipeline of 7 mn sq ft this fiscal, which will be essential to accelerate the growth momentum further. CRISIL expects these acquisitions to be largely funded through internal accruals and mix of structured debt/ equity investments hence, no major deviation in the debt coverage indicators is expected. This along with healthy financial flexibility of the group, its access to an unutilized bank limit of about Rs.205 crore and cash and equivalents of Rs 339 crore as on Jun 30, 2023. Additionally, the company has demonstrated track of record of easy refinance with a improving the rate of interest.
Weaknesses: Concentration in revenue: Majority of the inventory (85% of the ongoing area) is concentration in Pune, though the risk is mitigated by the healthy sales in the region. Going forward, diversity of business risk profile is expected to strengthen with an increase in launches in the non-Pune market which will increase the sales to 30% from non-Pune region by fiscal 2025 up from 20% in fiscal 2023.
Exposure to risks and cyclicality inherent in the real estate sector: Cyclicality in the real estate sector will result in fluctuations in cash inflow and volatility in sales. In contrast, cash outflow, such as for debt servicing, is fixed. Decline in demand may adversely impact sales velocity and collections and weaken the financial risk profile |
Liquidity: Strong Liquidity is supported by cash and cash equivalents of Rs. 339 crore and undrawn bank lines of over Rs. 205 crore CRISIL notes that the composition of debt include 53% as long term bank/NBFC debt and remaining will be in the form of NCDs from the private equity partner, the payment of which is linked to collections in the underlying projects.
The liquidity position is further supported by the healthy sales and collections from the ongoing projects and financial flexibility in the form of unencumbered land bank. |
Outlook: Positive CRISIL Ratings believes that the company will increase the scale of operation in the medium term duly supported by significant launch pipeline along with heathy salability in the ongoing projects, while maintaining a low leverage. |
Rating Sensitivity Factors Upward Factors
Downward Factors
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About the Company Incorporated in 1991, KPDL is promoted by Mr Rajesh Patil, Mr Naresh Patil and Mr Milind Kolte. The KPDL group is one of the largest residential real estate developers in Pune. The company has a healthy project portfolio of affordable and mid-income, and luxury residential segments through its brands, Kolte-Patil and 24K, respectively, and is expanding its presence in Bengaluru and Mumbai.
The group has developed over 26 million sq ft of projects, and as on June 30, 2023, ~4.05 million sq ft is ongoing unsold inventory spread across Pune, Mumbai and Bengaluru. It is expected to launch projects encompassing 7.47 msf in fiscal 2024, of which 2.73 msf is launched in Q1FY2024. The projects are undertaken under KPDL or separate special purpose vehicles, with KPDL being the majority shareholder in the projects. |
About the Group Incorporated in 1991, KPDL is promoted by Mr Rajesh Patil, Mr Naresh Patil and Mr Milind Kolte. The KPDL group is one of the largest residential real estate developers in Pune. The company has a healthy project portfolio of affordable and mid-income, and luxury residential segments through its brands, Kolte-Patil and 24K, respectively, and is expanding its presence in Bengaluru and Mumbai.
The group has developed over 26 million sq ft of projects, and as on June 30, 2023, ~4.05 million sq ft is ongoing unsold inventory spread across Pune, Mumbai and Bengaluru. It is expected to launch projects encompassing 7.47 msf in fiscal 2024, of which 2.73 msf is launched in Q1FY2024. The projects are undertaken under KPDL or separate special purpose vehicles, with KPDL being the majority shareholder in the projects. |
Key Financial Indicators (Consolidated)
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Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
*Emergency Credit Line Guarantee Scheme ##Yet to be issued |
Annexure - List of Entities Consolidated
*Details as on March 31, 2023 |
| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||||||||||||||
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Criteria Details
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