Buy Kalpataru; target of Rs 420: Emkay Global Financial

buy

Emkay Global Financial' research report on Kalpataru

KL is an established integrated real estate developer focusing on the Mumbai Metropolitan Region (MMR) and Pune, where it has strong recall and diversified pricing points. KL aims to accelerate cash flow and deleverage the balance sheet, with focus on faster project monetization. KL clocked pre-sales CAGR of ~30% over FY22-25, to Rs45bn. Our expectation of 16% CAGR in pre-sales to Rs71bn and timely progress in construction activities would lead to 16% CAGR in collections over FY25-28E. Accordingly, we expect NOCF (post-tax)to the tune of Rs32bn over FY26-28E which would enable the gradual deleveraging of KL’s balance sheet over the medium term. We value the residential business at 8.5x embedded EV/EBITDA and commercial business at 8% cap rate.

Outlook

We initiate coverage on Kalpataru (KL) with BUY and SOTP-based TP of Rs420.

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Kalpataru - 2303026 - emkay