Pune-based Kolte-Patil Developers ended the first nine months of FY24 with sales of over ₹2,000 crore and is confident of meeting its stated target of ₹2,800 crore for the entire year and growing at 25 per cent in the next two years.
The bulk of the company’s sales have been from Pune so far, but that representation could change with a slew of launches in Mumbai in the next few quarters.
businessline met with Rahul Talele, Group CEO, to discuss the company and the real estate sector.
What is the breakup of your sales among the three cities – Pune, Mumbai, and Bengaluru? Do you expect to meet or exceed your sales target for the year?
In the first nine months, most sales have come from Pune, barring ₹100 crore from Mumbai and some from Bengaluru. Around 95 per cent of sales came from Pune itself. For this year, we have given the target of around ₹2,800 crore, and already we have around ₹2,100 crore. We are confident of meeting this target, and for the next two years, pre-sales growth of around 25 per cent is what we are anticipating for the company.
How are you increasing your presence in Mumbai and Bengaluru?
There are multiple projects that we have closed in Mumbai. In the last financial year, we closed around ₹2,700 crore worth of projects in Mumbai, and they will eventually get launched in the next financial year, there will be the right balance of diversification beyond Pune to around 25 to 30 per cent.
How do you assess the demand in the three cities where you are present?
Well, around 35 to 40 per cent of household earnings are going into paying EMIs, so affordability is very high. If you analyse the three parameters of wage growth, property price growth and interest rate growth you will realise that affordability is very good. Another important factor is the inventory replenishment ratio. In the geographies where we are operating, particularly in Pune, where we have a concentrated and very large portfolio, the inventory replenishment ratio is less than one. This means that whatever inventory is getting sold, less than that is getting added in the city. The inventory hangover has gone down from 25 months a few quarters back to just 6 or 7 months. Considering that accumulated savings are there, a strong desire to purchase property and from established developers – all these things together, we believe there is a strong demand. I can see these numbers after 10-12 years. This cycle is driven by end users, unlike the earlier real estate cycles.
How many projects do you plan to launch in the next quarter?
We plan to launch around ₹7,000 crore worth of projects in the next financial year. A few of the projects will be launched in the first half and the others in the second half. So maybe around ₹1,500 to ₹2,000 crore worth of projects will be launched in the first quarter of the next financial year. One can be the NIBM project (Pune), the second can be the next phase of the Little Earth and Manor and Lakshmi Ratan project at Mumbai and maybe a few projects under Life Republic.
What is your strategy to strengthen your presence in the Mumbai market?
Our Mumbai strategy is a simple business development strategy. We want to acquire project with a topline potential of ₹300 to ₹900 crore and build houses with ticket sizes of around ₹1.5 crore to ₹3.5 crore. From a Mumbai context, these are the mid-income and upper-mid-income segments, and we are comfortably achieving good sales traction with this size and in this price range.. Our projects are mostly concentrated in the western part of the city. We have delivered a couple of projects, and three more are on the verge of delivery. We are also looking at central and Navi Mumbai as well.