Samco securities limited

Keystone Realtors Limited IPO

Add to Calendar 2022-11-14 12:00 AM 2022-11-16 12:00 AM Asia/Kolkata Keystone Realtors Limited IPO Keystone Realtors Limited IPO India

Keystone Realtors Ltd

About the company

Keystone realtors are one of the prominent real estate developers in the micro markets that the company is present in. They have a market share of 28% in Khar, 23% market 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.

They are led by experienced Promoters and a professionally qualified senior management team to provide the strategic direction and implementation of growth plans. The business is headed by Boman Rustom Irani as the Chairman and Managing Director.

As of June 30, 2022, Rustomjee has 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.

Strengths

·        As of June 30, 2022, they had 32 Completed Projects, 12 Ongoing Projects and 21 Forthcoming Projects across the Mumbai Metropolitan Region (“MMR”) that includes a comprehensive range of projects under the affordable, mid and mass, aspirational, premium and super premium categories, all under the Rustomjee brand.

·        A strong ‘Rutomjee’ brand image also encourages stakeholders in the real estate development industry to prefer partnering with the company, in particular for re-development and stalled projects.

·        Amongst the leading residential real estate development companies in MMR with a well-diversified portfolio and strong pipeline.

·        The company’s business model focuses on entering into the joint development agreements, redevelopment agreements with landowners or developers or societies, which requires lower upfront capital investment compared to direct acquisition of land parcels.

Risks

·        The business commands over 50% price premium in the markets of Juhu, Bandra East and Khar, as compared to the average price of the Western Suburbs micro-markets. Any change in the demand for the flats could affect the financials of the company.

·        Rustomjee has high levels of debt on its balance sheet. The Net Debt of the company as of Q1FY23 stood at Rs. 1,192 crores. The debt to equity ratio is 1.10x which is high.

Operational Update

Particulars

FY20

FY21

FY22

Q1FY23

No. of Buildings Launched

-

7

12

2

No. of Completed Buildings

7

4

3

2

Pre-Sales (Units sold)

607

823

1241

225

Collections (In Rs. Crores)

1,271

1,239

2,038

404

 

Financial Snapshot

Particulars (In Rs. Crores)

FY20

FY21

FY22

Q1FY23

Revenue from operations

12,115

8,487

12,694

1,686

Restated Profit after Tax for the Period / Year

145

2,318

1,358

42

Gross Margin (%)

25.63%

27.80%

22.11%

20.74%

Adjusted EBITDA Margin (%)

15.97%

17.61%

16.60%

6.85%

Net Debt / Equity Ratio

7.7

1.19

1.38

1.1

 

Conclusion

Rustomjee is a premium brand name in Mumbai with a prime market share in sub-markets such as Juhu, Bandra and Khar. The business leverages its brand image and commands a higher premium. However, its financials have not been strong. Its geographical concentration remains to be a concern. The company comes at a fair valuation but the company is debt-heavy which will keep the margins under pressure. We advise our investors to AVOID the IPO.

Issue Detail

  • Issue Open: Nov 14, 2022
  • Issue Close: Nov 16, 2022
  • Issue Type: Book Built Issue IPO
  • Face Value: Rs. 10 per equity share
  • Price Band: ?514 to ?541 per share
  • Bid Lot:27 Shares
  • Minimum Order Quantity:27 Shares
  • Listing At: BSE, NSE
  • Issue Size: Rs. 635 crores

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