As a player in the lucrative Mumbai Metropolitan Region (MMR) real estate market, Kalpataru is a developer with a long track record of operations. It is part of the Kalpataru group, which is a large infrastructure player.

In the post-COVID period, the MMR has been a keenly sought-after real estate segment, with large, medium, and small players focusing on different market categories—affordable, high-end, premium, and luxury. Almost 73 per cent of its portfolio of properties is in the MMR.

Kalpataru is among the many developers focused on building/developing premium and luxury properties. Though almost fully focused on MMR, the company also operates in Pune and a few other cities.

It has completed 75 projects covering 16.1 million sq ft. The firm has 25 ongoing projects totalling 24.8 million sq ft of construction and forthcoming projects totalling 16.3 million sq ft.

Unlike many players focused mainly on joint development projects, Kalpataru tends to own the land used for construction. At present, 75 per cent of its portfolio of properties is owned.

Many factors are positive for Kalpataru. Its project launches (in million sq ft) quadrupled from FY22 to 9MFY25.

Around 55 per cent of its saleable area is sold within a year of any project’s launch, and about 90 per cent of the saleable area is sold before the receipt of occupancy certificates. These aspects show reasonable customer confidence and execution capabilities.

More than 80 per cent of Kalpataru’s portfolio comprises high-end and luxury residences. At Rs 13,304, the company’s per sq ft realisations compare favourably with the best in the industry.

The company claims to be among the top five players in the MMR and Pune regions in terms of units sold from CY2019 to CY2024, going by a report from Anarock.

However, these positive factors have not translated into robust financials for the company. Since FY21 or, at the latest, FY22, most large and mid-sized developers have seen a strong bounce back in revenues and profits.

For Kalpataru, there has been reasonable revenue traction, though it has fluctuated somewhat. In FY22, the company’s revenues from operations were around Rs 1000 crore (EBITDA: Rs -47.8 crore) , which rose to a staggering Rs 3633.2 crore in FY23 (EBITDA: Rs -79.2 crore), but dropped to Rs 1930 crore in FY24 (EBITDA: Rs -128.4 crore) and Rs 1624.7 crore in 9MFY25 (EBITDA: Rs 77.7 crore). It has recorded operating and net losses in all those fiscals except 9MFY25 (Net profit: Rs 5.5 crore).

The company attributes this to the manner in which it recognises revenues. While revenues are recognised only when customers get property possession (linked to the occupancy certificate), expenses (sales, administrative and marketing) are recognised in the financial year of occurrence itself.

The company is launching an IPO at a price band of Rs 387 to Rs 417 and looking to raise Rs 1,590 crore from the fresh issue. Most of it is set aside for repaying debt.

Expensive valuation, high leverage

At Rs 417, the Kalpataru IPO asks for an EV (enterprise value) to EBITDA multiple of 165 times the annualised 9MFY25 figures on a post-offer base. The PE multiple based on annualised 9MFY25 figures run to four digits. These are largely due to the modest operating and net profit figures the company has recorded for the period.

When we consider the EV to sales figures, Kalpataru would trade at a multiple of around 8 times. In this regard, we take Keystone Developers with a similar revenue size (Rs 2004 crore in FY25) as Kalpataru’s peer. Now, Keystone Developers trades at EV to sales of 3.5 times, much lower than Kalpataru, despite enjoying better EBITDA margins (10.5 per cent in FY25) and profitable operations. Kalpataru has recorded losses at the EBITDA and net levels for the previous three fiscals (FY22, FY23 and FY24).

The other larger players in the MMR region, such as Oberoi Realty and Macrotech Developers, which have a larger scale of operations and profitability, enjoy a premium on the EV to sales multiple over Kalpataru. These companies have operating margins north of 30 per cent and modest debt-equity ratios (less than 0.5 usually).

The other key issue is Kalpataru’s heavy debt. As of December 2024, it had a net debt of Rs 10121 crore. Unsecured promoter loans of Rs 1,440 crore were converted into compulsorily convertible debentures, which were converted into equity shares in March 2025. With this infusion, the debt-equity ratio stood at 3.74. This ratio is likely to come down once a portion of the loans is repaid using the IPO proceeds.

The debt-equity is still much higher than its competitors and larger players in the space.

On the key counts of expensive valuations and heavy indebtedness, investors can skip applying to Kalpataru’s IPO and wait until the company manages consistent profitability at the operational and net levels and substantially reduces debt.

Published on June 25, 2025