Rustomjee Parent Keystone Realtors IPO: All You Need To Know
The parent company of the Mumbai-based real estate developer Rustomjee will launch its IPO on Nov. 14.
Mumbai-based real estate company Keystone Realtors Ltd., the parent company of the Rustomjee brand, will launch its maiden initial public offering between Nov. 14-16.
The Mumbai-based realtor is raising Rs 560 crore via fresh issue, and Rs 75 crore through an offer for sale. It is offering around 13.86 lakh equity shares at Rs 514-541 apiece in the IPO.
The company is valued at close to Rs 6,061 crore at the upper end of the price band. Promoters and promoter group will hold 86.7% of the post-offer issued, and paid-up equity share capital. The company is offering 10% of the post-issue equity capital during the IPO.
The company concluded preferential allotment of equity shares worth Rs 170 crore at Rs 499.35 apiece in May.
IPO Details
Duration: Nov. 14-16.
Issue size; Fresh issue: Rs 560 crore; Offer for sale: Rs 75 crore.
Price band: Rs 514-541 per share.
Face value: Rs 10 apiece.
Lot size: 27 shares and multiples.
Listing on: BSE and NSE.
Lead managers: Axis Capital, Credit Suisse.
Use Of Proceeds
Repayment/prepayment of certain borrowings: Rs 341.6 crore.
Business
The company is a Mumbai Metropolitan region-focused real estate developer, with significant presence in micro markets.
It commands a market share of 28% in Khar, 23% in Juhu, 11% in Bandra East, 14% in Virar, 3% in Thane, and 5% in Bhandup, in terms of absorption (in units) from 2017 to 2021, according to the real estate consultant Anarock's report.
At the end of June 30, 2022, it had 32 completed projects, 12 ongoing projects and 21 forthcoming projects across MMR.
It has presence across a comprehensive range of projects under the affordable, mid- and mass, aspirational, premium and super premium categories, all under the Rustomjee brand.
As of June 30, 2022, it had developed 20.22 million square feet of high-value and affordable residential buildings, premium gated estates, townships, corporate parks, retail spaces, schools, iconic landmarks and various other real estate projects.
The company undertakes maximum projects through the joint development, joint agreements and redevelopment model.
Currently, it is developing 9.26 million sq ft under ongoing projects and will be developing 26.37 million sq ft in the forthcoming projects.
At present, nearly 11% of the revenue comes from redevelopment projects. It commands a market share of 39% in Khar, 14% in Bandra East and 14% in Juhu from the overall redevelopment supply. It is looking to pursue the asset-light model by continuing to enter into joint development agreements, joint venture arrangements and redevelopment projects.
Financials
The company has been profitable for the last three years.
Peer Comparison
The company competes with Oberoi Realty Ltd., Suntech Realty Ltd., Macrotech Developers Ltd., and Godrej Properties Ltd. in the MMR market.
Risk Factors
Its business and profitability is significantly dependent on the performance of the real estate market, generally in India and particularly in the Mumbai Metropolitan Region. Varying market conditions in the MMR may affect its ability to ensure sale of projects and the pricing of units in such projects, which may adversely affect results of operations and financial condition.
An inability to complete ongoing projects and forthcoming projects by their respective expected completion dates, or at all, could have a material adverse effect on business, results of operations and financial condition.
Its focus on development of residential projects across various categories within the MMR, and the success of these projects is dependent on the ability to anticipate and address consumer preferences in the various market segments.
Significant increases in prices, including that relating to increase in taxes and levies, or shortage of or delay or disruption in supply of construction materials could adversely affect estimated construction cost and timelines and result in cost overruns.
Shortage of land for development in the MMR or a significant increase in cost of such land or transferable development rights available for development in the MMR may adversely impact business prospects and financial performance.
Any negative operating cash flows in the future would adversely affect cash flow requirements, which may affect ability to operate business and implement growth plans, thereby affecting financial conditions.