Up 2x from 52-week low! Motilal Oswal initiates coverage on this smallcap stock with 'Buy' rating

Shares of Kolte Patil Developers Limited (KPDL) are up over 110 per cent from its 52-week low of Rs Rs 242.60. The small-cap stock jumped 9 per cent to hit an intraday high of Rs 569.05 after Motilal Oswal initiated its coverage with a 'Buy' rating and a target price of Rs 700.

"After a decade of muted performance, KPDL is witnessing a strong growth in pre-sales as bookings reported 36% CAGR over FY21-23. Given its strong pipeline, we believe the company can maintain 25% CAGR in pre-sales at least for the next two years with further room for growth from new project additions," it said.

"While the sustainability of growth beyond that level depends on its ability to close new project additions, the pick-up in pace of BD activity in the last 18 months as well as its strong balance sheet should enable KPDL to focus on project acquisitions. Its past track record of steady margins and cash flows also implies that growth will be underpinned by profitability and execution," Motilal Oswal added.

The brokerage firm noted that during FY12-21, KPDL’s bookings remained stagnant at Rs 1200-1300 crore, with pre-sales volume sustaining at 2.0-2.5msf, barring a few good years (FY12/FY15/FY19).

However, the emergence of multiple growth levers, such as improved demand sentiment post-Covid, scale-up in launches of society redevelopment projects in MMR, and adoption of a multi-product strategy in its township project ‘Life Republic’, resulted in a 36% pre-sales CAGR, reaching a record Rs 2200 crore over FY21-23.

About Kolte-Patil Developers Limited:

Kolte-Patil Developers, incorporated in 1991, is a real estate company with dominant presence in the Pune residential market, and growing presence in Mumbai and Bengaluru.

KPDL markets its projects under two brands: ’Kolte-Patil’ (addressing the mid-income segment) and ‘24K’ (addressing the premium luxury segment).

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