Real estate company Arkade Developers Ltd is launching its IPO today. Before the IPO, the company raised ₹122.40 crore from anchor investors. The price range for the IPO is set between ₹121-128 per share, with a total IPO size of ₹410 crore. Public subscription for the IPO starts today (Monday, September 16) and will close on Thursday, September 19.
The lot size for the issue is 65 equity shares, and investors can apply in multiples of 65 shares. The IPO has reserved 50% of the shares for Qualified Institutional Buyers (QIBs), 15% for Non-Institutional Investors (NIIs), and 35% for retail investors. Additionally, employees are being offered shares worth ₹2 crore at a discounted price of ₹5 per share.
About Arkade Developers:
Arkade Developers is a growing real estate firm with a strong presence in Mumbai. As of July 31, 2023, the company has developed 1.80 million square feet of residential space, including projects with partnership entities where Arkade holds the majority stake. Since 2017, the company has launched 1,040 residential units and sold 792 units in the Mumbai Metropolitan Region (MMR).
In terms of revenue, Arkade Developers earned ₹224.01 crore in 2023, ₹237.18 crore in 2022, and ₹113.18 crore in 2021.
According to the company’s red herring prospectus (RHP), some of its listed competitors include Keystone Realtors Ltd with a P/E ratio of 74.85, Godrej Properties Ltd with a P/E ratio of 111.53, and Macrotech Developers Ltd with a P/E ratio of 78.46. Another peer, Suraj Estate Developers Ltd, has a P/E ratio of 40.92.
IPO Subscription Status:
The public issue is open for subscription from Monday.
Review of Arkade Developers IPO:
Several brokerage firms have reviewed the IPO:
- Choice Equity Broking Pvt Ltd states that Arkade Developers focuses on premium residential projects in Mumbai, primarily in the western suburbs. The company has completed 28 projects over 20 years, showing steady growth in unit sales. The company’s EV/Sales ratio is 3.2x, which is lower than the peer average. With a near debt-free status and reliable project delivery, the firm is expected to see long-term growth. As a result, Choice Broking recommends subscribing to the IPO.
- Marwadi Financial Services values the post-IPO share price at ₹6.61 with a P/E ratio of 19x, resulting in a market capitalisation of ₹2,376.14 crore. This is lower than peers like Keystone Realtors Ltd, Godrej Properties Ltd, Macrotech Developers Ltd, and Suraj Estate Developers Ltd, which have P/E ratios of 99x, 88x, 62x, and 42x, respectively. Marwadi Financial Services also recommends subscribing to the IPO due to its reasonable valuation and strong presence in the MMR region.
Arkade Developers IPO Details:
The total IPO size is ₹410 crore, which includes the issuance of 32,031,250 equity shares with a face value of ₹10 each. There is no “offer for sale” component in this IPO.
Arkade also conducted a Pre-IPO Placement of 1,626,016 equity shares at ₹123 per share, raising ₹20 crore. This reduced the size of the IPO from ₹430 crore to ₹410 crore.
Unistone Capital Pvt Ltd is managing the IPO, with Bigshare Services Pvt Ltd as the registrar.
Grey Market Premium (GMP):
As of today, the grey market premium (GMP) for Arkade Developers is +₹80. This means that the shares are trading at a premium of ₹80 in the grey market, according to investorgain.com. Based on the upper end of the price band, the estimated listing price is ₹208 per share, a 62.5% increase from the issue price of ₹128.
GMP shows how much investors are willing to pay above the issue price.
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