| Kolte-Patil Integrated Townships Limited | ||||||
| Rating outlook revised to 'Positive'; Ratings Reaffirmed | ||||||
| Rating Action | ||||||
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| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has revised its outlook on the long-term bank facilities of Kolte-Patil Integrated Townships Limited (KPIT, erstwhile Kolte-Patil I-Ven Townships (Pune) Limited) to ‘Positive’ from ‘Stable’ while reaffirming the rating at ‘CRISIL A+’. The short term rating has been reaffirmed at ‘CRISIL A1’.
The revision in outlook reflects sustenance of improvement in credit profile of Kolte-Patil Developers Ltd. (KPDL; rated ‘CRISIL A+/Positive’) and KPIT’s status of the flagship Life Republic project of the group. KPDL owns 95% stake in KPIT.
CRISIL Ratings expects KPIT will continue to derive considerable operational synergies from being part of the Kolte-Patil group and the group will provide managerial, financial and any other support to KPIT, on an ongoing basis.
Rating continues to reflect the parent’s strong brand and established position in the Pune (Maharashtra) residential real estate market, the same is being reflected in the strong saleability of the project till date. These strengths are partially offset by susceptibility to cyclicality inherent in the real estate sector. |
Analytical Approach CRISIL Ratings has notched-up KPIT’s standalone rating based on expectation of strong support from parent, KPDL, both on an ongoing basis and in the event of distress. This is in line with CRISIL’s criteria for notching up standalone ratings of companies based on parent support.
CRISIL Ratings has treated investment from KPDL in form of Optionally Convertible Redeemable Preference Share, Optionally Convertible Debentures (OCDs) amounting to Rs. 139 cr as equity because of equity like structure,- however payable as able basis with no scheduled redemption. |
Key Rating Drivers & Detailed Description Strengths: Strong business, managerial and financial support from parent: KPIT benefits from strong linkages with parent, KPDL, and the parent’s extensive experience should continue to support business risk profile. KPIT’s Life Republic is the largest project undertaken by KPDL so far, and hence, is strategically important to the parent. KPDL owns 95% stake in the company. KDPL is wholly responsible for the cash flow management of the project and involved in the day-to-day management of the company. Additionally, the parent is committed to ensure timely servicing of the company’s debt obligations and has provided a corporate guarantee for KPIT’s debt.
Strong project saleability: KDPL’s strong brand and established position in the Pune (Maharashtra) residential real estate market is reflected in the strong saleability of the project till date. As on June 30, 2023, the total current ongoing area is 5.7 msf of which 84% is sold. The project has a healthy launch pipeline of 4.17 msf in fiscal 2024 of which 1.53 msf already launched in Q1FY24.
Weaknesses: Exposure to execution and market risk in the ongoing and the planned pipeline for the project : Despite healthy sales velocity in fiscal 2023 and Q1FY2024, KPIT is exposed to execution risk associated with the ongoing phase, with only 38% of the cost is incurred as on Mar-2023 owing to significant addition of new launches in past few quarters and the planned pipeline of the project (2.64 msf is to be launched in FY24). The marketing risk associated with the planned launch along with the funding mix will be a key monitrable.
Susceptibility to cyclicality in real estate industry: Exposure to risks and cyclicality inherent in the real estate sector may result in volatility in both saleability and realisations and, hence, cash flows. Saleability will remain susceptible to economic cycle. |
Liquidity: Strong The strong liquidity is reflected in the high levels of customer advances to be received from already sold inventory. Collections from customers of around Rs 383 crore was received in fiscal 2023 and Rs 144 crore in Q1FY24. Collections are expected to remain above last year’s in fiscal 2024. Additionally, liquidity is supported by expectation of financial assistance from the parent, if and when required. |
Outlook: Positive CRISIL Ratings believes KPIT will continue to benefit over the medium term from its association with KPDL. |
Rating Sensitivity Factors Upward factors
Downward factors
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About the Company KPIT is a special-purpose vehicle floated by KPDL for the development of Life Republic, a township project in Pune. KDPL now owns 95% stake in KPIT with KDPL acquiring 50% stake of private equity partner, ICICI Ventures India Advantage Fund in 2019.
In fiscal 2023, on a KPDL consolidated basis, net profit was Rs 112 crore on operating income of Rs 1500 crore. |
About the Parent KPDL, incorporated in 1991, is promoted by Mr. Rajesh Patil, along with his brother, Mr. Naresh Patil, and brother-in-law, Mr. Milind Kolte. The company, along with its subsidiaries and associate companies, is one of the largest residential real estate developers in Pune. It has a healthy project portfolio across residential segments and is expanding into the Bengaluru and Mumbai markets. |
Key Financial Indicators
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Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
^Bank Guarantee is the sublimit of Overdraft/term loan facility. |
| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | |||||||||||||||
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^Bank Guarantee is the sublimit of Overdraft/term loan facility.
Criteria Details
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