Despite tepid expectations, the Mumbai-based real estate firm managed to post solid intraday gains, aided by post-listing buying interest. The Rs 1,590 crore initial public offering had seen moderate demand, with an overall subscription of 2.31 times. The IPO comprised a fresh issue of 3.84 crore equity shares and closed last week with Qualified Institutional Buyers (QIBs) leading the bid at 3.12 times subscription. Retail investors and non-institutional investors subscribed 1.43 and 1.40 times, respectively.
The listing was broadly in line with the mood in the grey market, where the Kalpataru IPO grey market premium (GMP) remained flat ahead of debut, mirroring muted Dalal Street sentiment. On BSE, shares began trading at Rs 414.10, just 0.02% above the issue price, reflecting the subdued enthusiasm.
Financials under scrutiny
Founded in 1988 and part of the Kalpataru Group, the company boasts a portfolio of 70 completed and 40 ongoing projects across major cities like Mumbai, Pune, Bengaluru, Hyderabad, and Indore. While its project pipeline suggests scale and experience, financial performance has raised investor eyebrows.Kalpataru has reported losses for the last three fiscal years, including a net loss of Rs 229 crore in FY23. The company posted a marginal profit of Rs 5.5 crore for the nine months ended December 2024 (9MFY25), indicating a potential, but still early—turnaround.
Still, valuations remain a sticking point. The post-issue price-to-earnings ratio works out to over 1,160x based on the trailing nine-month profit, a level that many consider excessive.
The IPO proceeds are largely intended to reduce debt, with Rs 1,192.5 crore allocated to repay or prepay borrowings. The company’s total debt stands above Rs 11,000 crore, a figure that remains a key overhang despite the infusion of fresh capital.
Analyst view: Legacy vs leverage
Harshal Dasani, Business Head at INVasset PMS, said the stock’s flat opening reflected a mix of credibility and concern.“Kalpataru listed with a muted premium, a reflection of both its three-decade real estate legacy and the overhang of structural financial concerns,” Dasani said. “With more than 70 completed projects and 40 ongoing developments, the company has proven execution capabilities, particularly in the Mumbai Metropolitan Region (MMR) and Pune. However, this very concentration in two of India’s most competitive and cyclical real estate markets presents a risk.”
Dasani said that “at Rs 8,500 crore market cap, the stock may appear reasonably valued, but the elephant in the room is its Rs 11,000+ crore debt — a figure that dwarfs profitability and signals sustained interest burden challenges. Despite generating Rs 1,930 crore revenue in FY24, Kalpataru posted a net loss, and has turned only marginally profitable in FY25 so far, with just Rs 5 crore profit over nine months.”
“The IPO proceeds are largely allocated toward debt repayment, but the combination of high leverage, cash-intensive operations, and 40 active project sites heightens the risk of cash flow strain. In this environment, even minor delays in collections or project execution could weigh heavily on margins,” Dasani said.
What should investors do?
While the first-day rally may give early entrants reason to cheer, analysts remain circumspect about the stock’s near-to-medium term prospects. As Dasani summed up: “While Kalpataru’s track record is solid, investors should remain cautious unless there’s visible progress on deleveraging and profitability revival.”
With a challenging balance sheet, thin profitability, and execution risk across ongoing projects, the stock may be better suited to investors with a long-term horizon and a higher risk appetite. For now, most market participants appear to be adopting a wait-and-watch stance.
Also read | Kalpataru shares to list today; mild GMP hints at muted debut
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)
