Kalpataru
- Kalpataru is coming out with a 100% book building; initial public offering (IPO) of 4,11,30,005 shares of Rs 10 each in a price band Rs 387-414 per equity share.
- Not more than 75% of the issue will be allocated to Qualified Institutional Buyers (QIBs), including 5% to the mutual funds. Further, not less than 15% of the issue will be available for the non-institutional bidders and the remaining 10% for the retail investors.
- The issue will open for subscription on June 24, 2025 and will close on June 26, 2025.
- The shares will be listed on BSE as well as NSE.
- The face value of the share is Rs 10 and is priced 38.70 times of its face value on the lower side and 41.40 times on the higher side.
- Book running lead managers to the issue are ICICI Securities, JM Financial and Nomura Financial Advisory and Securities (India).
- Compliance Officer for the issue is Abhishek Thareja.
Profile of the company
Kalpataru is an integrated real estate development company involved in all key activities associated with real estate development, including the identification and acquisition of land (or development rights thereto), planning, designing, execution, sales, and marketing of its projects. The company is a prominent real estate developer in the Mumbai Metropolitan Region (MMR) in Maharashtra and are present across all micro-markets in the MMR.
It focuses on the development of luxury, premium, and mid-income residential, commercial, and retail projects, integrated townships, lifestyle gated communities, and redevelopments. For its residential developments, it builds and sells a wide range of properties including villas, duplexes, apartments, and plots of varying sizes, with a primary focus on luxury, premium, and mid-income residential real estate. As of December 31, 2024, 68.31% of the Developable Area of the residential projects within its Development Portfolio were located within the MMR, aggregating to 33.45 msf of Developable Area. For commercial developments, it adopts a model of developing, leasing and/or selling commercial units. In its retail developments, it develops, manages and leases units within shopping malls.
When designing and developing a project, it leverages its experience and utilize a research-based approach for various aspects including layout planning, floor space index (FSI) utilization, unit size, amenities, interiors, and sales and marketing strategy. It has adopted an integrated real estate development model, with capabilities and in-house resources to carry out all key activities associated with real estate development, including identifying and acquiring land (or development rights thereto), planning, designing, executing, sales and marketing of its projects. As a result of its end-to-end execution capabilities and innovation, it has completed prominent projects in a variety of locations in the MMR.
Proceed is being used for:
- Repayment/pre-payment, in full or in part, of certain borrowings availed by the company and its subsidiaries
- General corporate purposes
Industry Overview
The real estate sector is one of the most globally recognized sectors. It comprises of four sub-sectors - housing, retail, hospitality, and commercial. The growth of this sector is well complemented by the growth in the corporate environment and the demand for office space as well as urban and semi-urban accommodation. The Indian real estate sector is witnessing sustained year-on-year growth and is expected to continue this trend for years to come. While Urbanization is the key driving factor behind the ever-increasing housing demand in cities, and Tier 2, 3, and 4 cities are taking a substantial amount of the load from metropolitan areas. In India, the real estate sector is the second-highest employment generator, after the agriculture sector. India’s real estate sector has shown remarkable resilience and growth potential in recent years, driven by both market forces and government policies. Affordability initiatives have catalysed the expansion of the residential segment, ensuring that housing solutions are accessible to a wider demographic.
The real estate market experienced another exceptional period characterised by robust performances in both the office and residential sectors. The housing segment particularly witnessed a significant surge, propelled by continued growth in sales in the higher price category of Rs 1 crore and above. The country’s economic stability has spurred businesses operating in India to expand their operations, consequently driving demand for office spaces. Additionally, many companies are now reverting to conventional office setups, either reducing or discontinuing their work-from-home policies, further boosting demand. Average housing prices rose by around 20 per cent in the last two years (2021-2023) across the top eight cities on rising demand. These eight cities include- Ahmedabad, Bengaluru, Chennai, Delhi NCR, Hyderabad, Kolkata, Mumbai Metropolitan Region (MMR), and Pune. Bengaluru, Delhi NCR, and Kolkata have witnessed the highest rise in average housing prices at about 30 per cent in 2023 compared to 2021 levels.
Indian real estate sector is likely to continue to grow in coming future aided by surge in urbanization, government initiates. India has experienced an extraordinary surge in urbanization in the last decade. This surge has been a direct result of the growing population. The expanding population will undoubtedly lead to a substantial surge in the demand for housing. The rising demand for residential properties is set to bring about a major transformation in the country’s real estate sector. Further, rising usages of office spaces, retail, warehousing and data centres will also provide support to the industry. Tier 2 and 3 cities in India have also witnessed a rising demand and supply for office real estate in India. Factors such as business expansion, low costs, infrastructure development, rise of IT and the services industry, and the availability of talent are some of key drivers of growth in office stock in Tier 2 and 3 cities. These factors, along with increase in formal workforce in India, will further generate demand for adequate volume of office space in India.
Pros and strengths
Prominent real estate company in the Mumbai Metropolitan Region in Maharashtra: The company is a prominent real estate developer in the MMR in Maharashtra and are present across all micro-markets in the MMR. For the calendar year 2019 to December 31, 2024, the MMR was ranked first among the top seven Indian markets (MMR, Pune, Bengaluru, Hyderabad, the National Capital Region, Chennai and Kolkata) in terms of supply, absorption and average base selling price. It is the fifth largest developer in the MCGM area in Maharashtra and the seventh largest developer in Thane, Maharashtra in terms of units supplied from calendar year 2019 to December 31, 2024. As of December 31, 2024, the company had a total of 73 Completed Projects in the MMR and Pune, Maharashtra, aggregating to 15.03 msf of Developable Area, representing 93.63% of the total Developable Area of its Completed Projects.
Well-established brand with the ability to sell throughout the construction phase: A strong and trusted brand is a key attribute in the industry. It influences buying decisions and helps command premium pricing for projects. The Kalpataru Group has a legacy of 55 years. It focuses on branded realty, with a belief in developing and marketing its real estate projects as “branded projects”. It has been granted the right to use the “Kalpataru” brand name by Kalpataru Business Solutions Private Limited, one of its Group Companies, pursuant to an intellectual property license agreement dated July 1, 2022. Its brand name has been incorporated in the vast majority of its project names, including Kalpataru Avana (Parel, Mumbai, Maharashtra), Kalpataru Magnus (Bandra, Mumbai, Maharashtra), Kalpataru Splendour (Wakad, Pune, Maharashtra) and Kalpataru Parkcity (Kolshet Road, Thane, Maharashtra).
Leading real estate company in implementation of green and sustainable buildings: The company focuses on the implementation of green and environmental sustainability practices for design and construction of its real estate development projects. It is one of the founding members of the IGBC, which is actively involved in promoting the green building concept in India. It aims to ensure energy efficiency, water conservation, resident health and wellbeing, and use of environment-friendly materials in its constructions (such as materials with GreenPro certification that signifies that the material is environment-friendly, or other materials and resources that have been certified as “green”, such as Green Guard, and Environmental Product Declaration, among others).
Strong project pipeline with visibility towards near term cash flows: The company’s ongoing Projects and the pipeline of Forthcoming Projects and its ability to sell throughout the construction phase, provide it with visibility on near term cash flows. As of December 31, 2024, it has 25 Ongoing Projects, six Forthcoming Projects, and five Planned Projects. These projects are expected to benefit from infrastructure developments that are being implemented or expected to be implemented in the relevant micro-markets. Several infrastructure projects are underway in Greater Mumbai and MMR so as to achieve long-term sustainability and increase the carrying capacity of the city’s transportation networks and thus improve traffic and transportation capacity in the MMR both capacity wise and quality wise.
Risks and concerns
Geographical constrain: As of December 31, 2024, March 31, 2024, March 31, 2023 and March 31, 2022, 94.84%, 94.93%, 94.93% and 95.00% of its real estate development projects were located in and around the Mumbai Metropolitan Region (MMR) and Pune, which may perform differently from, and may be subject to market conditions and regulatory developments that are different from, real estate markets in other parts of India or the world. It cannot assure that the demand for its projects in and around the MMR and Pune will grow, or will not decrease, in the future. Its business, financial condition and results of operations have been, and will continue to be, largely dependent on the performance of, and the prevailing conditions affecting, the real estate market in and around the MMR and Pune.
Exposed to the risks pertaining to land acquisition due to limited supply of land: The supply of land in the MMR and Pune is limited and highly competitive. The geographical constraints and high population density limit available land for new developments and redevelopment of old buildings is complex and time-consuming due to legal and regulatory hurdles. Further, in some urban areas, the market may become saturated with too many residential projects, leading to intense competition and price wars; and competition from emerging markets and new developers can impact established players. Intensified competition between property developers and real estate investment funds may result in increased land prices, oversupply of properties, lower real estate prices, and lower sales at its properties.
Business is capital intensive and requires significant expenditure: The company’s business is capital intensive and requires significant expenditure for land acquisition and project development. Its level of debt and the limitations imposed by its current or future loan arrangements could have adverse consequences, including, but not limited to, its ability to obtain additional financing for working capital, capital expenditure, land acquisition or general corporate purposes may be impaired; fluctuations in market interest rates may adversely affect the cost of its borrowings; its ability to satisfy its obligations under its financing agreements may be limited. Limitations imposed on the company due to its indebtedness or its inability to procure additional indebtedness could adversely affect its ability to conduct its business and operations or pursue its growth strategy.
Operations are labour intensive: The company’s operations are labour intensive, making it susceptible to strikes, work stoppages, increased wage demands or high attrition. These disruptions could affect its ability to maintain regular operations at its project sites and could lead to higher labour costs. Further, its business may also be adversely affected by high attrition. If the company or its contractors are unable to negotiate with the labour force or their sub-contractors, it could result in work stoppages or increased operating costs as a result of higher than anticipated wages or benefits. During periods of shortages in the supply of labour, it may not be able to complete projects according to its previously determined time frames, at its previously estimated project costs, or at all, which may adversely affect its business, results of operations and financial condition.
Outlook
Kalpataru is a real estate development company based in Mumbai, Maharashtra. The company specialises in developing residential and commercial properties, retail spaces, and integrated townships across several Indian cities, including Mumbai, Thane, Panvel, Pune, Hyderabad, Indore, Bengaluru, and Jodhpur. As of March 31, 2024, the company has 40 ongoing projects and has completed 70 projects. On the concern side, 94.84% of its real estate development projects were located in and around the Mumbai Metropolitan Region and Pune and it is exposed to risks originating from economic, regulatory, political and other changes in this region which could adversely affect its business, results of operations and financial condition. Moreover, high levels of inventories and trade receivables may adversely affect its liquidity, cash flows and profitability.
The issue has been offering 4,11,30,005 shares in a price band of Rs 387-414 per equity share. The aggregate size of the offer is around Rs 1591.73 crore to Rs 1702.78 crore based on lower and upper price band respectively. Minimum application is to be made for 36 shares and in multiples thereon, thereafter. On performance front, revenue from operations decreased by 46.88% to Rs 19,299.84 million for the Financial Year 2024 from Rs 36,331.82 million for the Financial Year 2023, primarily on account of a decrease in sale of plots/land. Moreover, the company’s loss for the year decreased by 49.22% to Rs 1,165.07 million for the Financial Year 2024 from Rs 2,294.33 million for the Financial Year 2023.
Most of the projects in the company’s development portfolio are located in the MMR and Pune, Maharashtra and diversified across different micro-markets and price points. There are significant barriers to participating in the real estate markets in the MMR and Pune, Maharashtra, which favor experienced real estate developers with established businesses. Some of these barriers include the limited availability of land and reduced capital access for unorganized developers. While the MMR and Pune, Maharashtra remain and are expected to remain its primary focus, it also intends to selectively pursue opportunities in other metropolitan cities and high-growth cities across India.
