Kolte-Patil Developers Limited (KOLTEPATIL) Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Kolte-Patil Developers Limited Q4 and FY '25 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Smit Shah from Adfactors PR. Thank you, and over to you, Mr. Shah.

Thank you, Manav. Good afternoon, everyone, and thank you for joining us on the Q4 and FY '25 results conference call of Kolte-Patil Developers Limited. We have with us Mr. Atul Bohra, Group CEO; and Ms. Dipti Rajput, Vice President, Investor Relations. Before we begin, I would like to remind you that certain statements made in today's discussion may be forward-looking in nature and may involve certain risks and uncertainties. A detailed statement in this regard is available in the Q4 and FY '25 results presentation that has been shared with you earlier. I now hand over the call to Mr. Atul Bohra, Group CEO, to begin the proceedings of this call. Thank you, and over to you, sir.

Thank you very much. Good afternoon, and a warm welcome to everyone present on this call. Thank you for joining us today to discuss operating and financial performance of the company for the fourth quarter and full year ended 31st March 2025. I would like to share my view on real estate environment, followed by overview of the key development during the period under the review. And thereafter, Dipti will take you through the key financial highlights. Following this, we will open the session for the question and answer. India continues to stand out as one of the fastest-growing economy globally, with FY '25 GDP estimated at about 6.5%. Despite the global trade and policy scenario remains uncertain, India's growth is expected to remain strong, supported by firm domestic demand, accommodative monetary policy and progressive regulatory environment. Also, the Union Budget FY '26 focused on inclusive growth, macroeconomic stability and consumption boost, realized the tax rates will be benefited middle-income individuals and, coupled with lower interest rate, could support the demand in housing segment as well. We expect the residential demand to sustain across mid-income and the premium houses. Coming to the performance for the period under the review. I'm happy to share that FY '25 has been a strong year for the company, with milestone achieved on various operational and financial metrics, including the collection, realization and the total income. In FY '25, we have achieved highest-ever collection of INR 2,432 crores, making a growth of 18% Y-o-Y. This was achieved on account of improved efficiency in construction milestones and steady sales. As a result, operating cash flow stood at INR 880 crores for FY '25. Sales remained at around INR 2,800 crores, impacted due to deferment in the planned project launches, owing to the regulatory and procedural delays. In FY '25, we launched projects with a total GDV of approximately INR 4,000 crores. New launches contributed 42% of the overall sales, reaffirming the optimistic demand scenario and acceptance of our brand. We reported highest-ever annualized realization of 7,758 per square feet, making growth of 8% year-on-year. This was achieved on the back of disciplined pricing strategy and successful implementation of rational price hikes across all the projects. Our flagship projects, Life Republic township, continued to perform well and contributed 1.9 million square feet to the volume. This reflects sustained homebuyer confidence in our offerings and execution. In quarter 4 FY '25, we recorded sales value of INR 631 crores, supported mainly by sustenance inventory across our portfolio. Collection during the quarter reached to a new high of INR 704 crores, reflecting 19% year-on-year growth. Realization for the quarter rose 9% Y-o-Y to 7,904 per square feet, led by firm momentum in the Life Republic and our 24K projects. On the business development front, enhancing our future growth pipeline in FY '25, we added a project in Vadgaon, Pune, with a GDV potential of INR 4,000 crores and potential sellable area of 5 million square feet. Overall, ongoing infrastructure development, evolving customer preferences, expanding economic opportunities and improved affordability are creating new demand corridors and strengthening the residential demand base. We are consciously working toward strengthening our presence in existing markets and evaluating new locations to widen our footprint within the 3 geographies we operate in. Moving on to financial performance. We reported highest-ever annual total income of INR 1,764 crores, making a growth of 27% year-on-year. This was driven by disciplined execution and timely project completion. Profitability has also been improved. In FY '25, EBITDA at INR 227 crores, which has grown by 252% Y-o-Y, and a PAT number at INR 107 crores, improved from negative INR 69 crores. Higher revenue base, improved realization and cost efficiency have contributed to improved margins. As we move forward, our focus continue to remain on growing sustainably and consistently delivering high-quality outcomes across all the key performing indicators. In our pursuit of redefining living, we are committed to customer satisfaction across segments and geographies. As one of the leading real estate developer with strong presence in Pune and growing footprint in MMR and having created solid foundation for multiyear growth, Kolte-Patil is well positioned to capitalize on opportunities and deliver long-term value. With this, I now hand over the call to Dipti to share financial highlights.

Thank you, Atul. Good afternoon, everybody. I would now like to take you through our financial performance for the quarter and full year ended 31st March 2025. Under CCM-based accounting, our Q4 '25 total income grew 37% Y-o-Y to INR 723 crores from INR 528 crores in Q4 FY '24. For the full year ended March '25, we recorded milestone total income of INR 1,764 crore compared to INR 1,395 crores in FY '24, marking a growth of 27% Y-o-Y. Reported profits have also been improving. Q4 FY '25 EBITDA of INR 112 crores improved significantly as compared to EBITDA loss of INR 8.7 crores in Q4 FY '24. For the full year FY '25, EBITDA at INR 227 crores increased by 252% Y-o-Y from INR 65 crores in FY '24. Q4 FY '24 -- '25 net profit after tax post minority interest stood at INR 65 crore as compared to a loss of INR 27 crore in Q4 FY '24. For the full year, net profit after tax post minority interest stood at INR 107 crores as compared to a loss of INR 69 crores in FY '24. As you are aware, revenue and profit recognition are closely linked to the progress of project completion in line with statutory accounting norms. With steady construction momentum, we have continued to witness strong collections, underscoring both execution efficiency and sustained demand for our offering. A key indicator of real estate business health is operating cash flow, which stood at about to INR 239 crores for the quarter and INR 880 crores for the full year ended March 2025. As on year-end, our net debt stood at negative INR 5 crores. These figures reflect our ongoing commitment to financial discipline, ensuring robust liquidity and operational resilience while pursuing growth. Thank you. And I now request the moderator to open the line for Q&A.

[Operator Instructions] We will take our first question from the line of Gautam Rajesh from Everflow Partners. Gautam, are you there?

Am I audible?

Yes. Now you're audible.

Yes. My question was, can you give the guidance for presales and launches for the next year and how it's going to pan out throughout the year?

Thank you, Gautam. We are very much on track of our long-term guidance. However, given the situation, we will revisit, going forward, the strategy, and it may take a quarter or 2 quarters to provide you the guidance for the year. However, on the long-term trajectory, we still remain very much on track.

Anything regarding the projects? Any updates on that over the next year and the new launches that we have?

Yes. So during the financial year, we have launched the project to the tune of almost GDV potential of INR 4,000 crores. Given the situation that a couple of projects are deferred on account of few of the delays in the approval cycle, this also, we'll provide you once we take a close look on the upcoming status on those projects.

Okay. So regarding the new launches and presales, you can only give us any update in maybe a quarter or 2? You can't give me any other like or anything? Yes. Okay.

[Operator Instructions] We have our next question from the line of Dhananjay Mishra from Sunidhi Securities.

Many congratulations for giving very strong operating performance. My question is that at the beginning of the year, we had guided for INR 3,500 crores. And as you said that a couple of projects were delayed because of approval. So can you quantify -- I mean can you know those projects which can be launched in the H1 after getting the approval?

Yes. So given the fact that, okay, there are general election and state election during the financial year and a couple of projects, more specifically by which we have observed few deferment in the launches. And as I already mentioned that we will keep a close eye on those, and we will update once we see some progress on those.

Okay. Good. And what is the status of this open offer as of now?

So the transaction is very much under regulatory approval process as of now. So all the details are already shared through stock exchanges filing. And once -- as and when it is progressing, from time to time, we are updating through exchange filings.

We have our next question from the line of Shreyans Mehta from Equirus Securities.

Medium- to long-term goal, but if you could highlight...

Shreyans, we weren't able to hear you. Can you please restart?

Hello?

Yes, we can hear you now. Shreyans, are you there? We'll move on to the next question from the line of Himanshu Upadhyay from BugleRock PMS.

Am I audible?

Yes.

Yes. So see, this is a question on -- more on the history of the company, okay? And how -- if we look at last 4 years, the realization of Life Republic has gone up from INR 4,000, INR 5,000 to INR 6,800 per square feet. And it has been consistently around 40% of sales in a year. But still, our operating margins are way below 20% for fifth year in a row, whereas when the cycle was bad from FY '13 to '20, the margins used to be near 25%. First question is, why is it so? And second question is, what are you doing to improve the margins in the business? I mean is there, at our end, something what we need to do on the cost side to improve our margins? And where are we lacking means? Because it's very difficult to understand when realizations keep on going up quarter after quarter. And what we are recognizing today in FY '25 is what we sold in FY '22 or '23, you say, so -- where, at that point of time also, the realizations were continuously increasing. And Life Republic should have been a much higher-margin product because of the raw land costs, which are much lower. Can you give your thoughts? And what are you doing to get the margins back?

Yes. Thank you, Himanshu. As you have seen that as compared to FY '24, we had the EBITDA margin of almost INR 65 crores. This year, we have seen almost INR 227 crores, with Y-o-Y increase of EBITDA of 252% as well as the PAT margin from negative INR 69 crores to INR 107 crores. So there is already a lot of improvement. And as you rightly mentioned that since the APR trajectory also in last 4, 5 years, we have seen a good amount of traction in rise of APR, specifically with the last year as well, the highest-ever realization, APR realization for this financial year with INR 7,758 per square feet, which has increased 8%. We see with all these things is really supporting well to the margin side. And going forward, there will be a margin improvement on the positive side. At the same time, the overall volume, as you see this year as well, the total income, which is one of the highest-ever income, INR 1,764 crores as compared to last year's INR 1,395 crores. So we see that this momentum is already built, and we will see something better in coming financial year as well.

But is there scope to reduce costs further hence? Or...

So Himanshu, as and when rationalized, we are doing that exercise as an internal exercise as well. However, it's really not that there to comment as of now.

Okay. One small question. We...

I'm sorry to interrupt, Mr. Himanshu. We will request you to rejoin the queue as your 2 questions are up. We have a next question from the line of Pritesh Sheth from Axis Capital.

Yes. So 2 questions from my side. First is on how would you read the market right now, considering last year, we had almost INR 3,800 crores worth of launches as in FY '24? And from those launches, we had a contribution of roughly INR 1,800 crores. This time also, we had like almost launches of INR 4,000 crores, but contribution is roughly INR 1,100 crores. So is it just because of the timing of these launches, hence, we are seeing this lower contribution? Or in general, do you see some weakness in your home market? That's my first question. And second question is on the time lines part of the approvals. Where do you think is the industry still lagging in terms of getting the approvals? And any progress or anything you are seeing that can fasten up these approvals in coming quarters? Or this will continue to remain at the steady pace? So those are my 2 questions.

Thank you. So coming to your first questions on -- more specifically on the demand scenario. We have seen in last couple of months, most of the walk-ins and the conversion number seems as in a very positive mode, specifically in Pune and Mumbai region, where we have seen uplift demand in the premium houses. At the same time, MIGs keep continuing sustained story. At the same time, there are quite good initiatives of interest rate reductions, and few of the recent budget announcement, we see the demand will sustain. Coming to the second question, where -- and the approval challenges and these scenarios, we have seen -- obviously, the last year, there are a few of the national- and the state-level elections and might be -- those are the couple of reasons. But however, we see that, okay, this scenario is improving and improved a lot. So going forward, I don't see -- but obviously, approvals are always a dependent factor. So it always have certain quarter-to-quarter slippages.

[Operator Instructions] We have our next question from the line of Shreyans Mehta from Equirus Securities.

So 2 questions from my side. So while we do understand that the deal is on, at the same time, there's no clarity on approvals. But if you could, some broad understanding or broad thoughts on the launches of Mumbai and, at the same time, launches of Pune ex LR, some broad numbers, a. And secondly, on the P&L, just wanted to understand, this quarter has been very robust. So how should one look at FY '26 and FY '27 from that perspective?

Yes. Thank you, Shreyans. So in terms of Pune launches, if I give you a broader perspective, last year as well, we have launched Life Republic itself. We have launched a project to the tune of INR 2,000 crores. And in rest of the Pune market, we have launched more than INR 1,600 crores, INR 1,700 crores worth of inventory. At the same time, in Mumbai, we have launched our first project in Navi Mumbai. And given the fact, there are a couple of upcoming launches in Mumbai as well as in Pune. However, as I already mentioned that keeping -- we are keeping a close eye on the approval procedures. And as and when we see progressive development, we will keep updating you.

Sure. And sir, secondly, on the P&L?

So on the margin front, I already explained you. I guess if you want, I can repeat it. On the EBITDA front, we have at 13%. That's INR 227 crores, which is improved by 252%, and we see this momentum will continue. As you have seen that there is a quite improvement in APR. And going forward, all those projects will get recognized. The margin will gradually grow, increase.

We have our next question from the line of Biplab Debbarma from Antique Stockbroking.

Sir, just one -- first question is on the long-term guidance. So can you just -- I know things are a little bit hazy right now for '26. But long term, where do you want KPDL to be? I mean if you have some clarity on that, you can give some clarity on that.

Thank you, Biplab. As far as I have already said that on the long-term guidance, we are very much on track. We are closely working on those guidance. However, given the fact, we are still revisiting the strategy, and maybe, it will take certain time to guide you further.

Okay. So my question was, what was the long-term guide -- the strategy that you are -- you mentioned?

So long term, we have already guided on INR 13,500 crores, and that is pretty much on track.

Okay. Okay. My second question is on the -- now Blackstone and -- there is a promoter, and there is Blackstone who would be jointly controlling the company. So how do you envision promoters and Blackstone's role involvement in company's strategic direction and day-to-day operations? If you could give some insight on that, that would be really helpful.

Okay. So this transaction is very much under approval and regulatory procedure. I think it is -- for me, it's very early to comment even though we have shared all the details through regulatory filings. However, once strategically, it moves and come to some conclusion, I think that is the right time where we can give you more comment on those.

We have our next question from the line of Prolin Nandu from Edelweiss Public Alternatives.

Two questions from my side. While these are repetitive, some -- want some clarity, first, on launches, right? So one of the reasons why we probably were not able to meet our guidance, right, of FY '25 was delays in the Mumbai launches. Now why -- I wanted to understand whether that was the only reason. And was this something to do with the macro and general election? Or was it something very specific to our project? And going by your previous answers, is it fair to understand that these problems should not -- no longer be there in FY '26? That's my first question on launches, sir. I'll ask the next question once you answer this.

Yes. So we are -- as I said, that we are keeping a close eye on most of our sanctions and approval procedures. Even though today we still have a strong pipeline for the launches, which will be in line with our long-term guidance to meet those long-term guidance. However, I really want to not comment much unless and until those approval get progresses at an advanced stage. That time, we will keep guiding you on specific time lines.

Okay. Understood, sir. The second question is on margins, right? Now in the previous call, what you have mentioned is that the reason why our reported margins were lower in, let's say, FY '24 and '25 was some of the projects were taken during the post-COVID era, and there was cost inflation. And one should see the recent projects being reflected in numbers because of the accounting is done sometime in FY '26, right? So that guidance still holds true of, let's say, mid- to high teens margin in first 2 quarters and then nearing the 20% by the end of FY '26. That's what you had guided for in the previous call. Does that still hold true?

I have already stated that we have seen a good amount of improvement in EBITDA and PAT number. And we foresee that in coming times, this number will definitely be better.

We have our next question from the line of Siddharth Agarwal from Prudent Partners.

My first question is, could you please give us some estimate of our fixed corporate annual expenses for the year, which has nothing to do with project operational cost?

Thank you, Siddharth. I think it remained more or less steady as compared to even FY '24 versus '25. The other expenses, which goes roughly around in the trajectory of INR 150 crores.

Okay. And sir, the second question is, could you give us some estimate of our delivery or value or area-wise, which is scheduled for acquisition in FY '26 or -- and '27 as per our commitments to our clients?

So Siddharth, we'll -- as I already mentioned that for the next year guidance and on is it in terms of presales or maybe delivery, it's too early to comment. We will be going...

But sir, this is -- delivery will be as per projects which were launched and we already know what is deliverable for the company this year, right? It's not a guidance.

Correct.

What is -- there could be slippages, but what is as per the projects' time line scheduled for delivery this particular year?

So is it -- this year, we have delivered and handed over almost 2,600, 2,700 of units. Next year, we estimate those to go around 3,500 units plus.

We have our next question from the line of Bharat Sheth from Quest Investment Advisors.

Thanks, Atul and Dipti, for the opportunity...

Sorry to interrupt, Mr. Bharat. Can you please be a little louder?

Am I audible now?

Yes, we can hear you now.

See, Atul, my first question is related that in initial or opening remarks. There is a delay in the approval due to regulatory changes and some of other Mumbai-based builder also as developer commented on. Sir, if you can share some -- what change has happened on regulatory guidelines and which has caused the whole delay? And what stage we are, I mean, in this regulatory compliance?