DB Realty Surges 3.4% Following Promoter Stake Sale, Eyes Debt-Free Status

DB Realty’s shares witnessed a 3.4% surge after the successful sale of promoter stakes, marking a significant step towards achieving a debt-free status. The company, in a regulatory filing, disclosed that a substantial portion of the proceeds, post-tax deductions, has been reinvested by the promoters. This reinvestment includes the repayment of related party transactions and an unsecured interest-free loan.

The company highlighted that these funds infusion efforts have allowed it to retire its entire debt. As a result, DB Realty anticipates achieving a debt-free status on a standalone basis by or before November 30, 2023. The journey towards becoming debt-free commenced three years ago when the company had a standalone debt of ₹1,373 crore and a consolidated debt of ₹3,140 crore as of September 30, 2021.

DB Realty has focused on asset monetization and joint ventures to eliminate debt. The company also executed a significant de-coupling exercise with the promoter group, exiting all investments in promoter group entities and recovering its entire preferential investment of ₹1,500 crore.

This strategic de-coupling has unlocked cash flow for DB Realty, facilitating the acquisition of key stakes in prominent hospitality ventures such as the Grand Hyatt Goa, Hilton Mumbai (75% stake), and a 50% stake in the upcoming Marriott Marquis Hotel & Convention Centre, St. Regis, Aerocity, and Prestige Trade Centre at Delhi.

Looking ahead, the company aims to build a substantial annuity portfolio and aims to possess over 2.00 million sq. ft. of prime leasable office space in Mumbai CBD by 2028. DB Realty, positioned among the top-listed entities in the country based on equity base and market cap, has entered the hospitality business as part of its growth strategy.

The company’s shares have more than doubled investors’ wealth this year, experiencing a remarkable rally from ₹95 to ₹208.50, reflecting a 120% increase. In comparison, Nifty Realty has gained 63% during the same period.

Rekha Jhunjhunwala holds a 1.99% stake in the company, equivalent to 10,000,000 shares as of the end of Q2FY24, according to Trendlyne shareholding data. The promoters maintain the majority stake at 53.8%, with foreign institutional investors (FIIs) holding a 2.2% stake, while the general public holds a 44% stake.

In response to recent developments, the company clarified that it has not received any notice regarding a Public Interest Litigation filed by Dr. Kirit Somaiya. The litigation alleges that the erstwhile government and Mumbai Municipal Corporation awarded contracts to DBS Realty and the Pune-based Chordia Group of Companies for the construction of tenements for project-affected people in Mumbai. DB Realty vehemently denies these allegations, considering them false and baseless.

As of 10:30 PM, DB Realty’s stock was trading with a 2% gain at ₹208.50 apiece.

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