Kalpataru to raise Rs 1,590 crore through IPO amidst debt repayment plans and improved financials

Synopsis

Kalpataru, a Mumbai-based real estate developer, is set to launch an IPO to raise ₹1,590 crore for debt repayment, diluting promoter stake to 81.3%. The company's revenue and margins have improved, with reduced unsold inventory and shorter overhang days. While higher costs previously impacted the bottom line, Kalpataru has started reporting profits in the recent nine-month period ending December 2024.

ET Intelligence Group: Kalpataru, a Mumbai-based real estate developer, plans to raise ₹1,590 crore through an issue of fresh shares to repay debt. The promoter group's stake will fall to 81.3% after IPO from 100%. Its revenue and margins have improved over past 3 years. Higher costs have affected bottom line. Valuation is cheaper than most peers. It has started reporting profit for 9 months to December 2024. Hence, investors with high-risk appetite may consider IPO.

Kalpataru has 24.8 million square feet of ongoing projects and 16.3 million sq ft of forthcoming projects. The percentage of ready-to-move unsold inventory of homes has fallen to 2.5% as of December 2024 from 4.8% in FY22. Inventory overhang days reduced to 17 months in 2024 from 26 months in 2022.

The company has obtained an intellectual property licence to use 'Kalpataru' brand name from Kalpataru Business Solutions, a promoter group company, by paying ₹25 lakh a year for the five years from April 1, 2022. Upon expiry of this period, it would pay either ₹25 lakh or 0.25% of annual consolidated turnover, whichever is higher. On annualised FY25 revenue, the amount works out to be ₹5 crore. It may keep rising as revenue increases.

Agencies

Revenue grew by 39% annually to ₹1,930 crore between FY22 and FY24; net loss reduced to ₹116.5 crore from ₹125.4 crore. The company has attributed loss to its accounting policies wherein project revenue is recognised after the customer gets control of assets, but corresponding expenses relating to sales and marketing are charged. For the 9-month period ended December 2024, revenue and net profit were ₹1,624.7 crore and ₹5.5 crore.

Adjusted Ebitda margin increased to 31.8% in the 9 months to December 2024 from 18.1% in FY22. Net debt increased to ₹10,120.52 crore from ₹9,984.35 crore. It plans to repay ₹1,192.5 crore of debt through IPO proceeds. Price-earnings multiple may not help since the company is yet to report profit for a full fiscal year. On a price-to-sales basis, the multiple works out to be 3.9 vs 3-20 for peers.

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