Key takeaways of the call

FY19 marked significant milestones in the corporate journey of the company. On the back of successful project launches, the company notched up new area sale of 0.63 msft [up 28.7%yoy from 0.49 msft in Q4FY18] and 2.7 msft [up 28.3%yoy from 2.1 msft] for Q4FY19 and FY19 respectively. In-terms of value sales booking for Q4FY19 and FY19 was up by 27.6% (to Rs 355.3 crore) and 19.5%yoy (to Rs 1431.6 crore) respectively.

The company has delivered 2108 apartment units aggregating to 2.2 million square feet in FY19 after obtaining occupation certificates.

The company has also improved collections from customers, focused on timely deliveries and invested in buying out our partners' stakes in some of our key projects, thereby creating a strong framework for sustainable long term growth.

Sales trajectory of the company expanded with significant contributions from MIG and Affordable Housing projects. Life Republic has been a significant driver of its performance where volumes have more than doubled over the previous year. Ivy Estate and Stargaze were other key contributors. Sales acceleration has been backed by continued focus on project execution, while collections in some projects are based on deferred payment plans resulting in back-ended cash inflows. However, on an overall basis, collections during the year remained strong at Rs. 1,179 crore, the highest in the history of the company. The company now expects strong cash flows in the current year as payments linked to construction based milestones are received from customers.

The company has entered into a share purchase agreement to buy-out the 50% stake held by ICICI Ventures in KPDL's flagship township project, Life Republic. Following the buy-out of its partners' shares in Life Republic and Downtown, payout for minority interest is slated to reduce and its economic interest across all our projects now increases from about 60% to about 90%, which will result in significant value creation for all stakeholders.

In FY20, the company expects to deliver further acceleration in its sales volume based on growing visibility from Pune and increasing contribution from Mumbai and Bengaluru. Faster execution of running projects will be supported by new project acquisitions – the company is evaluating potential acquisition of land parcels through outright purchases and structured deals with land owners. The company is also have several development management agreements in the pipeline that will allow it to leverage the strong customer proposition of the Kolte Patil brand to create capital-light business opportunities.

Mumbai and Bengaluru expected to grow to about 25% of sales by 2020

Expects 18-20% growth in presales (in value) in FY20 as the company has few more launches in current fiscal. Similarly the company expects 18-20% growth in STO, PAT and collections for FY20.

Targets delivery of about 1.8 msft in next two quarters.

Pune realty market is seeing huge supply. Affordable to mid segment is the market that is witnessing demand traction and the demand is relation of location and price. Eastern and western corridor of Pune is seeing strong demand.

Work will commence on three projects in Mumbai i.e. Hariratan, Sagarvaibhav and Om with an aggregate development area of 1.5 msft [of which KPDL share is about 0.57 msft] by year end. The company expects a top line of Rs 1000 crore from this 3 projects.

Construction spent in FY19 was higher at Rs 667 crore vs. 545 in FY18

ICICI Venture - Partly cash and partly stock. Of cash payment of RS 210 crore the company has already paid Rs 70 crore in March 2019 and balance has to be paid.

In Mumbai about 1.4 msf across 14 asset-light society redevelopment projects to be developed.

To launch upscale Koramangala project in Bengaluru in FY19

About 3 msf in subsequent phases of existing projects Life Republic and Ivy Estate likely to get classified under Section 80 IB Affordable Housing Scheme wherein there will be zero tax outgo.

The company is eyeing potential acquisition of 10-12 msf additional land bank through outright purchases/JDA with land owners. Of which about 1.5 msf for luxury projects, 3.5 -4 msf for affordable housing, remaining for MIG housing.

The company sets its focus on 360 degree operational excellence driving sales, revenue and profitability on a diversified operating base to create long term growth opportunities.

The company is enthused about the formation of a strong government with a majority mandate at the centre, which it believe, will create a robust growth and governance framework that expands longer term macro growth opportunities for the country. Acceleration of reforms and decision-making processes should result in rising consumer confidence, including in key sectors like real estate, where buyers are already getting more comfort from the strong regulatory and execution structures implemented over the last five years.