Shares of Mumbai-based real estate firm Kolte-Patil Developers Limited have been under pressure for the last five trading sessions. On Wednesday too, the stock fell nearly 5 per cent in morning trading on the NSE. This is despite the company reporting strong earnings performance in the December quarter on February 8.
Highlights of its Q3 results were: quarterly sales of 0.86 million square feet, up 56% year-over-year (y-o-y) and the highest in the past seven years. Similarly, the selling price of Rs 561 crore grew 77% year-on-year, which is a multi-year high. Besides, net debt declined by Rs 42 crore to Rs 172 crore during the quarter. With this, the net debt-to-equity ratio, one of the key metrics, declined to 0.91x.
The commentary at the launch was also upbeat. “We have a strong pipeline of launches in our three key markets for the next few quarters, with a total salable area of ~5.38 million sq ft and a total topline capacity of ~4,600 crore,” management said in a press release.
Then what are investors worried about in the stock?
On February 3, market regulator Securities and Exchange Board of India (SEBI) issued a show-cause notice to the company seeking clarifications regarding SEBI’s listing obligations and disclosure requirements. Under these regulations, all listed companies are obliged to furnish compliance information.
In a February 4 press release, Kolte-Patil’s management said that the company is in the process of reviewing the show cause notice and seeking legal advice on the matter.
The stock is down nearly 10% since February 3.
Analysts fear that this could result in penalties for the company. “The Q3 earnings numbers were not much different from the quarterly operating update released last month. So, in that sense, there is nothing surprising in it. However, the SEBI notice is a sentiment dilutive, even if the penalty is not significant. ,” said an analyst at a domestic brokerage house requesting anonymity.
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