Margin recognition improves; launch pipeline sturdy…
About the stock : Keystone Realtors (Rustomjee) established in 1995 is one of the prominent MMR based realtors having leadership in redevelopment space. It has successfully housed 19000+ families through several redevelopment projects.
• It has a substantial portfolio of projects spanning the MMR, with 39 Completed Projects, 17 Ongoing Projects and 21 Forthcoming Projects. So far, it has delivered over 29+ msf, with a pipeline of over 46 msf of construction area in the works.
Q 1F Y2 7 performance : The Keystone Realtors reported strong financial results for Q1FY27. Revenue up 72% YoY to ₹ 470 crore. Better project mix led to EBITDA and PAT margins of 21.3% and 10.4% (vs 10.1% and 6.4% Q1FY26). As a result, EBITDA and PAT up 3.62x and 3.25x YoY to ₹ 105 and ₹ 52 crore respectively. On the operational side, the company achieved presales of ₹ 617 crore driven by sustenance sales amid lack of project launches in Q1FY27. Collections came in at ₹ 599 crore. It secured two business developments of GDV of ₹ 547 crore, one addition to Dindoshi Goregaon Cluster and one plotted development in Igatpuri.
Investment Rationale:
• Launch pipeline of ₹ 8000 crore for FY27 stay intact: KRL maintained its launch guidance of ₹ 8000 crore (8 projects totalling 5.2 msf) for FY27. It has already launched 28HQ (Prabhadevi) and Ozone Skye (Goregaon West) aggregating ₹ 2000 crore in July 2026. The management retained its pre-sales guidance of ₹ 5000 crore for FY27 and ₹ 10,000 crore vision for FY30. Further, it added two projects having GDV of ~₹ 550 crore during Q1FY27 and retained ₹ 8000 crore new project additions target for FY27. KRL has an unsold inventory (ongoing + forthcoming) of ~₹ 55,000 crore which is expected to generate more than ₹ 15,000 crore operating cash flows (company’s share).
• Moving towards higher margin trajectory in revenue recognition: KRL’s legacy projects comprised 62% of FY26 revenues generating ~5% adjusted EBITDA margins (before corporate overheads) leading to blended adjusted EBITDA margins of 10.9%. For FY27, legacy projects are expected to contribute 15% of revenues leading to significant improvement in overall EBITDA margins. Further, in its ongoing projects portfolio, embedded EBITDA margins in unrecognised revenues from already sold projects stands at ~21% while for the balance unsold projects is estimated at 35%. Consequently, we expect material improvement in EBITDA margins for the company from FY27 onwards.
Rating and Target Price :
• We value KRL on DCF basis by calculating project-wise NAV discounting net post-tax operating cashflows at 11% WACC rate with valuation methodology for its residential businesses. We retain our target price of ₹ 590 and Buy rating on the stock.
