Suraj Estates, a prominent Mumbai Metropolitan Region developer focused on premium areas in South-Central Mumbai like Prabhadevi and Parel, conducted a successful Initial Public Offering (IPO) of Rs. 400 crores. The IPO was oversubscribed by 15.65 times. The company, with an impressive portfolio of over 10 lakh square feet in residential and commercial developments, aims to use the proceeds to reduce debt, acquire land, and for general corporate purposes. Analysts cite the company's impressive portfolio of over 10 lakh square feet in residential and commercial developments and its consistent growth, with FY23 profits rising 20.98% YoY and revenue rising 12% to Rs 306 crore, as the reason behind the enthusiasm in the market.
Suraj Estates is one of the prominent developers in Mumbai Metropolitan Region (MMR) focusing on the Central and Southern regions. Its real estate portfolio is spread across premium localities such as Prabhadevi, Parel, Dadar, Mahim, etc. Suraj Estates has 35 years of experience and have delivered over 10 Lakh square feet in residential and commercial developments. They have developed custom building spaces for major institutions such as the Clearing Corporation of India, National Stock Exchange of India, and Union Bank of India.
Suraj Estates Developers came up with an Initial Public Offering (IPO) for Rs. 400 crores which was open for bidding from 18th December to 20th December. The price band of the issue was fixed at Rs. 340 - 360 per share. The entire issue was fresh issuance of equity shares without a single component for Offer for Sale (OFS). The proceeds from the IPO would be used to reduce the debt taken by the company and its subsidiaries, acquisition of land or land development rights and a portion would be kept aside for general corporate purposes.
On the final day of the bidding process Suraj Estates Developers IPO was subscribed over 15.65 times - the offer size for the IPO was only for 82.35 Lakh shares whereas the company received bids from investors for 12.88 crore shares. Qualified Institutional Buyers (QIBs) bid the most among any category of investors by picking up 24.31 times of the portion allocated to them. High net-worth Individuals (HNIs) bid for the shares were 18.9 times of the total shares allocated for them. On the other hand, Retail Investors picked up 9.30 times the share allocated for their quota of shares.
The issue was made through the book-building process wherein 50% will be available for qualified institutional buyers, 15% for non-institutional bidders, and 35% for allocation to retail investors.
On the Institutional side of things, before the commencement of the IPO the anchor investors booked shares worth nearly Rs. 120 crores. SBI General Insurance Company, Tata Housing Opportunities Fund, Aditya Birla Sun Life AMC, LC Pharos Multi-Strategy Fund VCC , ITI Flexi Cap Fund and Meru Investment Fund PCC-Cell 1 are the ones who got allotment in the anchor book. There was participation from BNP Paribas Financial Markets and Societe Generale-ODI as well. The book managers for the IPO include ITI Capital and Anand Rathi Advisors.
The IPO is expected to be listed on the exchanges of NSE and BSE on 26th December. In the grey market the stock is currently trading at a premium of Rs. 50-60 over the issue price.
Analysts advised investors to subscribe to the issue as the company has shown consistent growth over the last few years. The company clocked a profit of Rs 32.06 crore in FY23, against Rs 26.50 crore in the previous year, a rise of 20.98%. Revenue during the year FY23 rose 12% to Rs 306 crore, primarily due to an increase in sales of new projects launched in the value luxury segment and additional floor transactions of commercial projects. The company's profit margin increased to 10.49% in fiscal 2023 from 9.72% in fiscal 2022. The management is optimistic that this trend will continue.
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