Buy Kolte Patil Dev Ltd.: Fundamental Call on June17,09

Fundamental Call onJune17, 09: By Praveen Kr Sevak
Co Name: Kolte Patil Dev. Ltd. Reco: Buy
CMP: Rs 46 (around)
Target: Rs 60-64 (1-2 months), Rs 138.4 (6-12 months)
Best Buy: Dip around Rs 40 (accumulate at this level)
Investment Rational:
1. Fundamentally talking, though the company has recorded negative growth in Dec Quarter 2009, yet it is pretty attractive. Currently it is trading at a PE multiple of 3.2X and PB of 0.54, that is very attractive compare to peers in this industry. Its profitability margin is also attractive PBDIT margin is above 40% and PAT margin is25 % (approx). Moreover, It has a DE (Debt Equity ) ratio is 0.15 and current Ratio is 1.35, that is again fair enough to buy and hold the share.
2. It is in the business of Real Estate development especially Residential Properties, Commercial properties and IT parks as well. The company has enough experience in this segment, as they have already developed more than 25 such projects since its incorporation in 1991. And, currently they are having around 28 projects in hand. All the properties based in Pune and Banglore.
3.As the prospect of Realty and Infrastructure is looking good and its stock is trading at a dirty cheap valuation we put BUY rating with a Target of Rs 138 for on the basis of Historical Ratios. Currently trading at a PE of 3X of FY10E EPS of Rs 17.3.

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