Introducing Suraj Estate Developers IPO
Suraj Estate Developers IPO is scheduled to open on December 18, 2023 and close on December 20, 2023. The company is engaged in real estate business across residential and commercial sectors in south-central Mumbai region. This article provides: Suraj Estate Developers IPO Date, issue details, size, GMP, positive aspects, risks or negative factors, and reviews.
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About Suraj Estate Developers Limited
The company has been in the real estate business since 1986 and develops properties across residential and commercial sectors in the south-central Mumbai region.
The company has a residential portfolio and established presence in the Mahim, Dadar, Prabhadevi and Parel markets, which are sub-markets of the small market in south-central Mumbai.
They mainly focus on value luxury, luxury segment and commercial segment. They are currently venturing into residential real estate development in Bandra submarket. Due to our expertise in redeveloping tenant properties under Section 33(7) of the Development Control Promotion Regulations, our focus is on the south-central region of Mumbai, mainly consisting of Mahim, Matunga, Dadar, Prabhadevi and Parel. . In the Mumbai region. Since most of the land parcels in the South Central Mumbai market are in the nature of redevelopment projects, its core competency lies in tenant settlement, which is a key factor in unlocking the value of such land parcels.
They identify existing tenants and assigned and non-assigned properties and enter into development agreements or partner with landlords of such tenanted properties on an outright purchase basis via deed of assignment.
We do not provide our own construction services and rely 100% on third-party contractors for construction services on our projects. Since its inception, the company has completed 42 projects in the South Central region of Mumbai with a development area of over 1,046,543.20 sq ft. In addition to the completed projects, there are 13 ongoing projects with developable area of 20,34,434.40 sq. ft. and salable carpet area of 6,09,928 sq. ft. and 16 upcoming projects with an estimated carpet area of 7,44,149 sq. ft. I have a project.
IPO date, price range and size of Suraj Estate Developers
| IPO date | The IPO will begin on December 18, 2023 and close on December 20, 2023 |
| IPO listing date | December 26, 2023 |
| Type of problem | Book Built Issue IPO |
| face value | 5 rupees per share |
| IPO price range | 340 rupees to 360 rupees per share |
| lot size | 41 stocks |
| Exhibition location | BSE and NSE |
| Total publication size | Rs. 400 million |
About company finances
| Fiscal year end/period end (amount in billions) | ||||
| Period ends | March 31, 2021 | March 31, 22 | March 31, 23 | June 30, 2023 |
|---|---|---|---|---|
| assets | 792.00 | 864.00 | 942.58 | 994.73 |
| revenue | 244.00 | 273.91 | 307.89 | 102.81 |
| Profit after tax | 6.28 | 26.50 | 32.06 | 14.53 |
| net worth | 29.15 | 39.16 | 71.39 | 86.11 |
| reserves and surplus | 22.94 | 23.32 | 55.48 | 70.29 |
| Total loan amount | 600.48 | 638.16 | 593.09 | 598.50 |
Target of IPO
The purpose of IPO is only fresh issues. The Company plans to use these funds for the following purposes:
- Repayment/advance of outstanding borrowings of the Company and its subsidiaries Accord Estates Private Limited and Iconic Property Developers Private Limited.
- Acquisition of land or land development rights.
- General corporate purposes.
Suraj Estate Developers IPO Gray Market Premium (GMP)
The gray market premium (GMP) for Suraj Estate Developers IPO is reported to be in the range of Rs 50-54. It is important to note that as these transactions take place in an offline mode, it is not possible and difficult to independently verify the accuracy of GMP. To get reliable information in real time.
Suraj Estate Developers IPO Valuation
- IPO price range is Rs 340 to Rs 360 per share
- PER analysis
- Considering last year’s FY2023 EPS of Rs 10.1, the P/E ratio is 36x.
- Considering the last three years’ weighted EPS of Rs 8.16, the P/E ratio is 44x.
- Comparison with listed peers
- Suntec Realty Limited is trading at a P/E ratio of 4536x (highest price)
- Hubtown Limited is trading at a P/E ratio of 16x (lowest)
- Industry average PER is 668x
- Although some companies exhibit abnormal P/E ratios, the company’s IPO price range of 36x to 44x P/E is considered reasonable.
Positive factors for investing in Suraj Estate Developers IPO
Positive factors for investing in an IPO include:
- Years of presence and expertise: Our company has been involved in the real estate business since 1986 and has a rich track record and experience. We specialize in the redevelopment of tenanted properties in the south-central Mumbai region with a focus on areas such as Mahim, Matunga, Dadar, Prabhadevi and Parel.
- Diverse portfolio: We work on real estate development ranging from residential to commercial fields. Present in the ‘Value Luxury’ and ‘Luxury’ segments, unit prices range from Rs 10 million to Rs 130 million, catering to different price points.
- Project success: Completed 42 projects with development area of over 1,046,543.20 sq ft in South Central Mumbai region. It currently manages 13 ongoing projects with developable area of 20,34,434.40 sq ft and salable carpet area of 6,09,928 sq ft. There are 16 upcoming projects with an estimated carpet area of 7,44,149 sq.ft.
- Customer-centric approach: We focus on addressing customer requirements across a variety of locations, ticket sizes, and configurations. Demonstrates the ability to deliver differentiated products with a customer-centric business model.
- Established brand and market presence: A strong brand presence with over 36 years of experience in the Mumbai real estate market. A major brand recall occurred in the south-central Mumbai region submarket, leading to a large number of sales referrals from existing customers.
- Competitiveness: An established brand with a long-standing presence in the value luxury and luxury segments of the residential real estate market. Strong expertise in tenant occupancy for redevelopment projects. Effective marketing and sales strategies.
- Strategic focus: The strategic business is focused on strengthening its market position in the south-central Mumbai region through upcoming projects. Continue to focus on redevelopment projects using an asset-light model. Selective development of commercial projects in south central Mumbai region.
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Negative or risk factors for investing in this IPO
- Dependence on real estate in South Central Mumbai: The business is highly dependent on the performance and conditions of the South Central Mumbai real estate submarket. Lack of diversification exposes the company to economic, regulatory and natural disaster risks unique to the south-central Mumbai region.
- Title uncertainty: Uncertainty regarding the ownership of our real estate assets could have a material adverse effect on our current and future earnings.
- Regulatory compliance for redevelopment projects: Redevelopment projects require compliance with Regulation 33(7) of the Development Management Promotion Rules, 2034, including settlement of tenants, approvals from MHADA and MCGM, construction of tenants and salable fractional units.
- Project completion risks: If we are unable to complete our ongoing and future projects by their estimated completion dates or at all, our business, results of operations and financial condition could be materially adversely affected.
- Unsold stock and sales period: As of October 31, 2023, the company had 216 unsold units in its ongoing projects. If we are unable to sell project inventory in a timely manner, our business, results of operations and financial condition could be adversely affected.
- Project approval issues: The upcoming project is in the preliminary planning stage and requires approvals and updates from the Brihanmumbai Municipal Corporation. Difficulties in meeting preconditions or delays in obtaining approvals can impact the project schedule.
- Seasonality and geographic expansion challenges: Our operations are subject to seasonality and our expansion into additional geographic markets, including the MMR region, may pose challenges and contribute to fluctuations in our results of operations and financial condition.
- Competitive industry landscape: We operate in a highly competitive and fragmented industry, and increased competition could adversely affect our results of operations.
- Potential negative cash flow: Negative future cash flows could adversely affect our cash flow requirements, affect our business operations and ability to execute on our growth plans, and impact our financial condition.
- Auditor focus: Statutory auditors highlight certain areas of focus in the financial statements and indicate potential areas of concern.
- Unsecured loan recall: As of September 30, 2023, the company had unsecured loans of Rs 774.35 million, which could be recalled by lenders at any time and pose potential financial risks.
- Investors should consider all risk factors set out below. Suraj Estate Developer RHP.
Suraj Estate Developers IPO – Should I subscribe?
Investors should consider all the pros and cons before evaluating whether this IPO is good or bad for their investment.
- The company offers attractive investment opportunities with its 36 years of extensive presence and expertise in the real estate market, particularly in South Central Mumbai. The company boasts a diversified portfolio in both the residential and commercial sectors and has completed numerous successful projects, demonstrating a strong track record in project execution. Our focus on value luxury and luxury segments, coupled with our customer-centric approach, positions us to serve different market segments. Competitive strengths such as an established brand, experienced management team, tenant payments expertise and effective marketing strategy contribute to a positive investment story.
- However, investing in IPOs carries inherent risks. The company’s heavy reliance on the south-central Mumbai region results in a lack of geographic diversity and exposes it to region-specific economic, regulatory, and natural disaster risks. Compliance challenges in redevelopment projects, potential delays or non-completion of ongoing and future projects, and large inventories of unsold units pose significant operational and financial risks. Additionally, the competitive and highly fragmented nature of the real estate industry may adversely affect the Company’s results of operations. In addition, concerns about the potential for negative cash flows, the emphasis placed on financial statements by auditors, and the risk that lenders will collect on unsecured loans contribute to an overall risky investment proposal.
Investors can invest in this IPO after considering all the positive and risk factors.
Suresh KP is the founder of Myinvestmentideas. He is a NISM Certified Investment Advisor and he is a NISM Certified Research Analyst. I have been analyzing financial markets for the past 20 years. He can be reached at suresh@myinvestmentideas.com.
