Kolte Patil soars 10% – Motilal Oswal initiates coverage with ‘Buy’

Kolte Patil’s shares witnessed a remarkable surge of almost 10% on Wednesday, April 10. This surge followed shortly after brokerage firm Motilal Oswal initiated coverage on the stock, along with a bullish ‘buy’ recommendation. 

According to Motilal Oswal’s analysis, the target price for Kolte Patil has been set at Rs 700, indicating a potential upside of 34%.

At the opening bell, Kolte Patil shares were trading at Rs 536, marking a notable uptick from its previous close of Rs 517.45. The rally continued as the stock quickly scaled to Rs 567.80 on the NSE. By 10 am, the shares were trading at Rs 561.65 apiece, reflecting an increase of 8.54%.

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Motilal Oswal’s assessment of Kolte Patil Developers highlights a notable shift in performance dynamics. The brokerage firm noted a remarkable growth trajectory in pre-sales, with a reported 36% CAGR over FY21-23. 

With a strong pipeline in place, Motilal Oswal projects a sustainable 25% CAGR in pre-sales for the next two years, anticipating further growth from new project additions.

The report emphasizes that the company’s ability to secure new project acquisitions will be pivotal in sustaining growth momentum. However, Motilal Oswal remains optimistic, citing Kolte Patil’s focus on growth alongside a robust balance sheet, enabling the company to pursue project expansions effectively.

Additionally, Motilal Oswal forecasts a 22% CAGR in pre-sales over FY24-26, projecting an upward trajectory for the company. The firm also anticipates a recovery in gross margins to 34% by FY26, translating into an expansion of EBITDA margin to 17% in the same period.

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Furthermore, Motilal Oswal expects a rebound in PAT margin to 8% in FY26E, resulting in a PAT of Rs 160 crore and a return on equity (RoE) of 14%, reminiscent of the company’s performance in FY18.

However, the report highlights key risks, including the potential inability to add new projects and any slowdown in demand momentum. Despite these challenges, Motilal Oswal’s bullish outlook underscores confidence in Kolte Patil’s growth prospects.

Over the past year, Kolte Patil shares have exhibited robust gains, doubling investors’ money with an impressive surge of approximately 101%. However, despite this significant growth. 

The stock has lagged behind the Nifty Realty index, which recorded a staggering gain of 136% during the same period. Comparatively, the Nifty 50 index has observed a more modest increase of about 29%.

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