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Kolte-Patil IPO looks reasonably priced: Experts

Published on Fri, Nov 16, 2007 at 18:11 | Source : Moneycontrol.com

Updated at Fri, Nov 16, 2007 at 18:22

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Kolte-Patil Developers, a real estate developer in India, is entering the capital markets with an initial public offering (IPO) of 19,000,836 equity shares of Rs 10 each for cash at a price to be decided through a 100% book-building process.

The issue will open on November 19, 2007, and will close on November 22, 2007. The price band has been fixed between Rs 125 and Rs 145 per equity share.

Moneycontrol conducted a poll on market experts to check whether to apply for the public issue or not. Experts said apply.

Experts/Company	Poll Result	Experts view
R S Iyer (KR Choksey)	Apply	Kolte Patil is very good issue. They have good name in the markets and promoters background is also good. Issue price band is very cheap. People should apply for the issue.
Manish Bhatt (Prabhudas Lilladher)	Apply	Kolte Patil Developers is a good issue. Its issue price is reasonable. The company has good brand name in Pune, where it owns maximum of its land. One should subscribe to the issue with short to medium term view.
SP Tulsian (Investment Advisor)	Apply	Kolte Patil Developers is a leading realty player in Pune market and out of total saleable area of 39.78 million sq. ft., 92% is located in Pune while 8% is in Bangalore. Both are hot and rising market for realty where saleability of the property is fast with good demand from middle and upper class of users. The company has joint venture agreement with ICICI Venture Fund Management for three of its projects with equity and equity linked financing for the projects. This shows that the project and the company has been duly checked and verified which instill confidence. The debt of Rs.150 crore is also not very high, considering its land bank. The expanded equity of Rs 75.25 crore translates into a valuation of Rs 1,100 crore at the upper band. Saleable area of 39 million sq. ft. translates into weighted average value per sq. ft. of Rs 282. The same looks quite reasonable and good profits can be made by the company after development. Even, amount to be mobilized, from the issue would get partly used for development and construction of Rs 149 crore and balance Rs 176 crore shall be used for making payment, for acquiring development rights. Considering all these, issue looks reasonably priced, even at the upper band and hence investment is recommended.

The objects of the issue are to finance acquisition of development rights; finance the construction and development costs for some of the proposed projects; fund expenditure for general corporate purposes and achieve the benefits of listing on the Stock Exchange.

The issue comprises a net issue of 18,812,709 equity shares to the public and a reservation of 188,127 equity shares for eligible employees. The issue will constitute 25.25% while the net issue will constitute 25% respectively of the post-Issue paid up capital of the company. The equity shares are proposed to be listed on the NSE and BSE.

The company posted a total income (consolidated) of Rs 2, 524.43 million in fiscal 2007 and an adjusted profit after tax of Rs 835.61 million. For the 3 months ended June 30, 2007 , the Company posted a total income (consolidated) of Rs 889.65 million and an adjusted profit after tax of Rs 338.76 million..

The book running lead managers to the issue are DSP Merrill Lynch Limited and Edelweiss Capital Limited.