Rajandran R Founder of Marketcalls and Co-Founder Algomojo. Full-Time Derivative Trader. Expert in Designing Trading Systems (Amibroker, Ninjatrader, Metatrader, Python, Pinescript). Trading the markets since 2006. Mentoring Traders on Trading System Designing, Market Profile, Orderflow and Trade Automation.

D. S. Kulkarni Developers Ltd : Best Pick from Marketcalls

4 min read

D. S. Kulkarni Developers Ltd., (DSKDL) is a 16-year old Pune, Maharashtra based company established in 1991. The company entered the capital market with a public issue in April 1993 to part-finance its working capital requirements for its existing and future activities. It also came out with a rights cum follow-on public issue last year, which was heavily oversubscribed. D. S. Kulkarni is the chairman and managing director of the company.

The company is engaged in the construction of residential and commercial buildings and has acquired plots for development in Mumbai and Pune, which will provide excellent opportunities for development in the future.

Subsidiaries: DSKDL has incorporated a subsidiary company named 'DSK Developers Corporation' (DSKDC) in the State of Delaware, USA, and was subsequently registered to do business in the State of New Jersey also. The primary focus of DSKDC is on search and acquisition of properties in New Jersey and New York, USA. It has acquired six properties in New Jersey and will develop them further in FY08.

Completed Projects: DSKDL’s completed projects in Pune include Vanashree at Nav Sahyadri, Ashwini Apartments at Rasta Peth, Om Ganesh Company Housing Society at Budhwar Peth, Amit Apartments at Model Colony, Suryalok Nagari at Hadapsar, Dnyaneshwar Nagari at Pune-Satara Road, Haryali Phase I at Modi Baug and Saraswati Vinayak at Paud Road. In Mumbai, the projects include Kalyan Nagari Phase I and II at Kalyan (W), DSK Saraswati at Malad (E), DSK Trilok at Dadar (W), DSK Sahil at Vile Parle (E) and DSK Harita at Kandivili (E). Its other ventures include DSK Motors, DSK Infotech, DSK School, DSK World Man Computers etc.

 
Current Projects: Its projects currently under construction are in Pune, Mumbai and Nashik. At Pune, the projects under construction are DSK Vishwa Phase I, II and III, DSK Saptasur Phase IV, Vishwa Villa, DSK Sayantara, DSK Sundarban, DSK Frangipani, DSK Garden Enclave and Gulmohar. In Mumbai the projects include DSK Madhuban and DSK Durgamata Towers at Cuffe Parade in South Mumbai.

SEZ: The company has received an in-principle approval from the Special Economic Zones Board of Approvals to develop a Multi-services SEZ of 250 acres at Fursungi in Pune district. It has executed a Term Sheet with GTC Real Estate NV of Netherlands (GTC) for joint development of this SEZ. The said SEZ is proposed to be developed in a SPV Company to be equally owned by DSKDL and GTC. GTC is expected to invest about. US $96 million into this project in a phased manner.

Branding Initiative: Earlier DSKDL had its activities restricted to in and around Pune city. But now it has acquired land and expanded its activities in Bangalore and Chennai. The company has also purchased seven properties in USA through its US subsidiaries to create its global footprints.

Awards: DSKDL is the recipient of several awards like Hind Ratan Sword of Honour, CM Shah Concrete Technology Award, Kumar AESA award for the best housing complex (DSK Ranwara), AESA award for the best glazing work 3S station (DSK Toyota) and was ranked as the second fastest growing real estate company in India, Construction World Top Builders Award 07, Construction World NICMAR Award 2007 and CNBC Awaaz, CRISIL Real Estate Award 2007.

The company has been integrated as a member of Global Growth Company by World Economic Forum, an institution based at Switzerland. In 1999-2000, it was awarded ISO 9001 certificate from the Quality Certification Bureau Inc., Canada, as well as from the Dutch Council for Accreditation

 
Performance: DSKDL has reported impressive results for FY07. It clocked net sales of Rs.229.74 cr. with a net profit of Rs.35.16 cr. netting an EPS of Rs.16 for 2006-07.

Financials : The company has an equity base of Rs.22 cr. and with reserves of Rs.254.25 cr. the book value of its share works out to Rs.125.57. In FY07, the company's net worth has risen by 702% to Rs.27,625 lakh from Rs.3,445 lakh in FY06. Net worth for FY07 mainly constitutes of the share premium of Rs.20,078 lakh due to the increased share capital by way of composite issue. The debt:equity ratio has improved from 2.03 times in FY06 to 0.29 times for FY07.

Share Profile: The share of DSKDL is listed and traded on the BSE under the B2 segment. It touched a 52-week high/low of Rs.428/224. At its current market price of Rs.310, it has a market capitalisation of Rs.831 cr.

Dividends: The company has been paying dividends as shown below:
March 2007 – 20%; March 2006 – 20%; March 2005 – 7%; March 2004 – 7%; March 2003 – 7%.

Prospects: The real estate story in India is growing bigger by the day. The increase in purchasing power and exposure to organised retail formats has redefined the consumption pattern. As a result, retail projects have been mushrooming even in B-grade cities and the retail market is expected to grow at around 35% p.a. This growth is facilitated by favourable demographics, increased purchasing power, existence of customer-friendly banks and housing finance companies, professionalism in real estate and reforms initiated by the government to attract global investors.

India has emerged as the most attractive destination for retailers in 2007. According to the latest AT Kearney study, India leads the annual list of most attractive emerging markets for retail investment followed by Russia and China for the third year in a row.

 
Demand for office premises is reported to be growing owing to establishment of IT/ITES services. By 2010, the IT sector alone is expected to require 150 million sq. ft. of space across major cities.

According to India Retail Report 2007, shopping malls and entertainment houses such as multiplexes and organised retail, which currently account for only 4.6% of the US $270 billion Indian retail sector, is expected to grow at 37% in 2007 and 42% in 2008. The report adds that organised retail in India has the potential to add over US $45 billion business by 2010. This is expected to create a demand for around 220 million sq. ft. of retail space by 2010.

As the tourism industry is growing rapidly, the demand for hotels and resorts is also increasing and the government’s encouragement to SEZ augurs well for construction companies. The prospects for real estate developers, therefore, are quite promising to say the least.

Conclusion: The construction sector is an important constituent of every economy and accounts for about 12% of India’s GDP. The Indian real estate has huge demand potential in almost every sector, especially in commercial, residential and retail. It is estimated that in the residential sector there is a housing shortage of 19.4 million units out of which 6.7 million are in urban India.

At its current market price of Rs.310, the DSKDL share is discounted less than 15 times against the industry average P/E multiple of 27 times. Besides, real estate stocks are the flavour of the season with the likes of DLF, Unitech, Sobha Developers, Parsvnath, Omaxe etc. are being eagerly sought after by investors. DSKDL is quoting at a reasonable price and there is substantial scope for appreciation. Buy for significant gains in the medium-to-long-term

 

Rajandran R Founder of Marketcalls and Co-Founder Algomojo. Full-Time Derivative Trader. Expert in Designing Trading Systems (Amibroker, Ninjatrader, Metatrader, Python, Pinescript). Trading the markets since 2006. Mentoring Traders on Trading System Designing, Market Profile, Orderflow and Trade Automation.

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