The focus is primarily on real estate companies focusing on the Mumbai metropolitan area, such as Macrotech (Roda), Karpatal and Last Me (Keystone Real Estate Agent).
Macrotech (Lodha) had high leverage with a total debt of 18,600 crores at the time the IPO was launched, the investment banker said.
Macrotech developers noted that in the latest operational update, the company’s net debt was reduced to 3,990 crore in the March quarter, in the background of record sales and healthy collections.
Similarly, Karpatal reduced its obligations from 11,000 crore to 8,820 crore after the promoter converted the bonds to fair at the time of the IPO, he added.
Kalpataru also plans to use the revenues of the IPO to reduce its debt equity ratio to less than double after posting public issues.
According to analysts, the average interest cost on real estate companies’ debts ranges from 10 to 13%.
Recognition of revenue
In the real estate business, revenue is recognized using two methods: percentage of completion and project completion.
The completion method percentage recognizes revenues as the work progresses and the corresponding costs are also recognized.
However, the method of completing a project recognizes revenue and corresponding expenses when the project receives an occupancy certificate.
However, sales and marketing costs and other overheads will be recognized during the year incurred.
This can lead to reported losses during the project lifecycle. This, he said, until revenues were recorded in the closing year of the profit and loss account project.
Kalpataru’s unsold stock is 8,249 crores according to the offer document. The company registered CAGRs and collections between FY22 and FY24 of 23% and 31%, respectively.
The nine-month collection in 2013 amounted to around 2,621 crores.
Kalpataru has announced a new project for a 10 mn square foot available for sale between fiscal 2022 and nine months.
The phased completion of Kalpataru’s ongoing project will result in debt reductions, analysts said.
According to analysts, debt plays a key role throughout the project financing scheme, but real estate is a cyclical business which can lead to overvaluation.
But it’s good to see real estate players exploring different options to cut their debts and monetize their assets, he said.
Released on June 25th, 2025
