Kalpataru – MMR’s leading Real Estate Developer

24 Jun 2025 , 10:54 AM

IPO – Overview

Kalpataru Limited is one of India’s oldest real estate development companies that is focused on high quality residential and commercial real estate in India’s MMR (Mumbai Metropolitan Region). It was established more than 50 years ago and is headquartered in Mumbai. It has delivered more than 20m sft of developed space and has robust pipeline of to-be-delivered projects.

It remains a key beneficiary of India’s growing real estate market with a focus on MMR. Over the years, it has won several awards for its design, quality and sustainable architecture. It has a professional management team and longstanding commercial and financial partners.

The company is doing an IPO, with the offer proceeds to be used largely for reducing its debt.

Offer Details of the IPO

The IPO of Kalpataru Limited consists of

• Fresh issue of  Equity Shares of face value of ₹ 10 aggregating up to ₹ 15,900 million.
• There is no offer for sale in this IPO.
• Price Band: The company has fixed a price band of Rs. 387 to Rs. 414 per Equity Share
• BRLMs:

• ICICI Securities Limited
• JM Financial Limited
• Nomura Financial Advisory and Securities (India) Private Limited
• MUFG Intime India Private Limited (Formerly known as Link Intime India Private Limited)

Objectives of the IPO:

The net proceeds from the IPO are intended to be used for de-leveraging and other general corporate purposes. The proceeds will be used to repay the borrowings under the company’s and its subsidiaries’ credit facilities and for general corporate purposes.

De-leveraging/Debt Pay-Down

• Repayment/pre-payment, in full or in part, of certain borrowings availed by the company and its subsidiaries: ₹11,925.00 million.
• Refund of loans taken by the company: ₹3,332.58 million.
• Repayment of borrowings by the company’s subsidiaries: ₹8,592.42 million.

Industry Overview

Real estate is one of the biggest markets in the world and a significant contributor to the country’s economic prospects. In India, while it has seen significant consolidation in the past two decades, it is still highly fragmented. Government has also introduced many initiatives for over 50 years to encourage affordable housing.

Evolution of the Industry

In the 2000s, the industry witnessed a significant boom, driven by rapid urbanization, economic growth, and increasing demand for housing and commercial space. This period also saw the emergence of several large-scale developers, including DLF, Unitech, and Hiranandani.

However, the industry faced a significant downturn in 2008, due to the global financial crisis. The industry witnessed a significant decline in sales, and several developers faced financial difficulties.

However, driven by economic growth and expanding financial access, the industry has been seeing better times.

Customers and Market Segments

The Indian real estate industry caters to a wide range of customers, including:

• Residential buyers: Individuals and families looking to purchase homes for personal use.
• Commercial buyers: Businesses and organizations looking to purchase or lease commercial space.
• Investors: Individuals and institutions looking to invest in real estate for rental income or capital appreciation.

The industry can be broadly segmented into several categories, including:

• Residential: Development of apartments, villas, and other types of housing.
• Commercial: Development of office space, retail space, and other types of commercial property.
• Industrial: Development of warehouses, logistics parks, and other types of industrial property.
• Hospitality: Development of hotels, resorts, and other types of hospitality property.

Market Size and Growth

The Indian real estate market has grown at a CAGR of approximately 11.26% from USD 50 billion in 2008 to USD 180 billion in 2020 and is expected to further grow to reach USD 1,000 billion by 2030 and touch USD 5,800 billion by 2047. By 2025, it is estimated to contribute 13% to the country’s GDP.

Sub-Segment Size and Growth

The housing sector has seen a continual increase in the last few years and is estimated to be one of the major drivers of growth in India in the coming years. The residential real estate market size is expected to grow from USD 180 billion in 2020 to USD 1,000 billion by 2030.

Key Driving Factors

The Indian Real Estate Market is primarily led by the growth of a few important factors such as:

• Demographic Dividend: The large young population of India, where more than 65% of the population is below 35, will create demand for housing and other real estate asset classes.
• Urbanization: India is urbanizing rapidly – by 2046, more than 50% of Indians are projected to live in cities.
• Rising Income Levels: India’s GNI per capita is rising, which means that there is more disposable income in the hands of the people, boosting demand for housing and other real estate asset classes.
• Government Steps: Several steps have been taken by the government to promote the real estate sector, such as the Real Estate (Regulation and Development) Act, 2016, and the Pradhan Mantri Awas Yojana-Urban 2.0.
• Infrastructure Development: With infrastructure development (roads, highways, and public transport) in place, there is likely to be an increase in connectivity and therefore demand for housing and other real estate asset classes.

While the industry is likely to witness robust growth, it is not without challenges. The industry faces several challenges, including regulatory uncertainty, infrastructure constraints, and environmental concerns.

 

An Overview of Kalpataru Limited

Kalpataru Limited, one of the largest real estate developers in MMR, was founded in 1969 by the chairman Mr. Mofatraj P. Munot. The company has developed and grown over the years, with an increasing portfolio of projects in numerous micro-markets of MMR.

Business Segments

The company’s business is organized into the following segments:

• Real Estate Development: Kalpataru Limited is one of the major real estate companies, operating in the field of residential and commercial properties, and also ventures in developing commercial projects, such as MNCs, office premises, and shopping malls, catering to its customers.
• Commercial Development: The company builds commercial projects, including office and retail spaces and mixed-use projects.
• Retail Development: Kalpataru Limited’s retail arm creates varied retail formats such as shopping and entertainment destinations, large standalone retail showrooms, and multiplexes, and format retail in the form of shopping complexes.
• Integrated Township Development: It operates in integrated townships, which consist of residential, commercial, shopping complex, and other amenities.

Key Features and Strengths

• Leading Brand: Kalpataru Limited is a well known brand with an established reputation and brand image in the MMR for developing high-quality projects.
• Project Diversification: The company enjoys project diversification across different micro-markets in MMR.
• Experienced Management Team: The management of Kalpataru Limited is experienced and has demonstrated a strong track record of successfully completing projects within the stipulated timelines.
• Sustainability Focus: The firm focuses on sustainability with the goal of building green and sustainable buildings.

Competitive Landscape

The company operates in a highly competitive industry with several major players. The competitive landscape is characterized by intense competition, with companies competing on factors such as price, quality, and innovation.

Major Competitors

• Godrej Properties Limited: A leading real estate developer in India, with a strong presence in the Mumbai Metropolitan Region (MMR) and Pune.
• Macrotech Developers Limited: A prominent real estate developer in India, with a significant presence in the MMR and other cities.
• Oberoi Realty Limited: A well-established real estate developer in India, with a strong presence in the MMR and other cities.

Competitive Positioning

Strengths:

• Strong brand presence and reputation.

The company’s brand “Kalpataru” is a well-established brand in the real estate sector and acts as a strategic sales driver enabling the company to sell projects at a premium to competitors. The company’s execution expertise and strong in-house operations, including design, EPC monitoring, and quality control teams, are key strengths in the industry.

• Diversified portfolio of projects across different micro-markets and price points.

With projects that spread across the Mumbai Metropolitan Region (MMR), Pune and Goa, the real estate company has a diversified portfolio comprising residential, commercial and township projects. Presence in the MMR The company’s presence in the MMR, especially South Central and some Western Suburbs segment, is a key positive. With a robust land bank under future projects, Kalpataru is geared to change the skyline in the near future.

• Sustainability, End-to-end execution capabilities and innovation

Kalpataru is committed to developing green and sustainable buildings designed for the future, with 47 projects certified by IGBC. The developer’s commitment to sustainability has strengthened its reputation and marketability, and its green certified title earns it incentive FSI.

Weaknesses:

• High debt levels and financial leverage

Kalpataru Limited has high debt levels, which are not covered by operating cash flow. Its net gearing position was 86.50% as of December 31, 2024, indicating a highly leveraged structure

• Dependence on a few large projects for revenue and profitability

The company’s operations are highly dependent on the MMR market and may be adversely affected by a variety of factors, including changes in regulation, economic downturns, and infrastructure construction.

• Limited land bank

Kalpataru Limited’s land bank is low, especially in the MMR, thereby constraining the company from launching new projects. The company’s land bank is also focused on a small number of locations, potentially making it more reliant on those areas.

Overall, the company has a strong competitive position in the industry, with a diversified portfolio of projects and end-to-end execution capabilities. However, it faces intense competition from other major players, and needs to continue to innovate and improve its offerings to maintain its market share.

Financial Performance

Revenue Growth: Slow and Steady

The company’s sales have shown a steady increase over the years. Sales (collections)  increased from INR 15,592 million in 2022 to INR 26,859 million in 2024. This growth can be attributed to the company’s strategic expansion into new markets and robust launches

The company’s revenue growth is driven by its ability to identify and capitalize on new business opportunities. The company’s focus on luxury, premium, and mid-income residential, commercial, and retail developments has also driven revenue growth.

Profitability: The Good and the Bad

The company has posted strong collection growth, but has not been profitable in any of the past three years (ending FY24). The company reported a loss of INR 1,165 million in 2023, compared to a loss of INR 1,253.62 million in 2022. The increase in losses was due to higher investment in new projects, higher finance costs, and depreciation expenses.

The company’s losses increased due to higher investment in new projects, which led to higher interest and depreciation expenses. The company’s strategy to develop luxury, premium, and mid-income commercial, residential, and retail products has also led to increased costs associated with land acquisition, construction, and marketing.

Although losses expanded, the company’s financial position is strong. Sales growth is expected to continue, driven by strategic new market development and robust demand for products, considered long-term growth drivers. The company’s focus on developing luxury, premium, and mid-income residential, commercial, and retail projects is expected to drive revenue growth and increase profitability in the long term.

Figure: Peer Comparison

Company Name	Revenue	Face Value	Closing Price	P/E	EPS	RoNW (%)	NAV per Share	P/NAV
Kalpataru Limited	16,247.4	10.0	–	–	–	0.55	113.11	3.66
Oberoi Realty Limited	44,957.9	10.0	1,903.1	35.91	52.99	13.92	380.76	5.00
Macrotech Developers Limited	103,161.0	10.0	1,452.6	90.84	15.99	8.87	175.66	8.27
Godrej Properties Limited	30,356.2	5.0	2,402.0	92.10	26.08	7.26	359.39	6.68
Sunteck Realty Limited	5,648.5	1.0	447.3	89.64	4.99	2.27	213.28	2.10
Mahindra Lifespace Developers Limited	2,120.9	10.0	359.0	56.71	6.33	5.25	120.82	2.97
Keystone Realtors Limited	22,222.5	10.0	559.5	56.97	9.82	6.24	157.85	3.54
Prestige Estates Projects Limited	78,771.0	10.0	1,656.1	48.31	34.28	12.17	281.59	5.88

Source: RHP, Closing Price as on 13 June 2025, Financials are for Y/E March 31, 2024 and 9me 12/31 for Kalpataru

 

Figure: Financial Summary

INR millions	Period Ending March 31, 2022	Period Ending March 31, 2023	Period Ending March 31, 2024	Period Ending December 31, 2024
Sales (m sft)	2.2	2.7	2.8	2.1
Sales Collections	15,592.2	22,074.4	26,859.2	26,217.1
Revenue from operations	10,006.7	36,331.8	19,299.8	16,247.4
EBITDA	-359.8	-496.7	-780.1	1,016.7
Profit After Tax (PAT)	-1,253.6	-2,294.3	-1,165.1	55.1

Source: RHP