At 10:55 am on the last day of bidding, 3.26 subscriptions had been made for the ₹400 crore initial public offering (IPO) of real estate company Suraj Estate Developers. Against the 77.77 lakh shares that were on offer, it had bids for 2.53 crore shares.
Monday, December 18, marked the start of the IPO, which ends today, December 20, 2023. The real estate firm has set the price range for the offering at ₹340–360 for each equity share.
The Non Institutional Investors (NII) quota was bid 3.41 times, while the retail portion of the IPO was subscribed the most, 4.97 times. Only 13% of the portion designated for qualified institutional buyers (QIBs) received a bid.
GMP: The company’s shares were trading at ₹70 on the grey market, which is 19.44 percent higher than the IPO price at listing. Since December 17, things have stayed the same. It had previously been at ₹66.
It is important to remember that the grey market premium is merely a snapshot of the performance of the company’s shares on the unlisted market and is subject to sudden fluctuations.
Concerning the issue: 1.11 crore shares, valued at ₹400 crore, are being issued anew. The public offer does not include an offer for sale (OFS) segment.
Anchor Investors: Jagdish Master managed Quantum-State Investment Fund, Blue Lotus Capital, Lighthouse Canton, Societe Generale, BNP Paribas and Meru Investment Fund, SBI General Insurance Company Limited, and Tata Housing Opportunities Fund are among the 11 anchor investors who have contributed over ₹120 crore to Suraj Estate Developers. These investors have allocated 33.33 lakh equity shares at ₹360 each.
Goal: The company and its subsidiaries’ total outstanding debt will be repaid in full or prepaid using the net proceeds from the initial public offering (IPO). The money will be used for general corporate purposes as well as the purchase of land or rights for land development.
Lot Size: Bidders may submit applications in lots, with each lot containing 41 shares of the company in the IPO. For that reason, one lot will cost ₹14,760 at the upper price band.
Concerning the company: Suraj Estates Developers, based in South Central Mumbai, was founded in 1986 and specializes in the development of both residential and commercial real estate. Interestingly, the company doesn’t offer any internal construction services, so it depends solely on outside contractors to complete its projects.
In the South-Central Mumbai region, it has completed 42 projects in the past. The company has developed over 10 lakh square feet of land in Mumbai, with 13 ongoing projects and 16 upcoming projects. It serves a range of budgets and competes in the “value luxury” and “luxury” markets.
Important Dates: December 21, 2023 is most likely to be the date for share allocation following the implementation of the T+3 listing rule. It is anticipated to list on the BSE and NSE on December 26.
What advice do brokerages give?
Investmart Swastika: Subscribe
In the South Central Mumbai region, Suraj Estate has been a real estate developer, working on both residential and commercial projects. The company’s residential portfolio is located in the Mahim, Dadar, Prabhadevi, and Parel submarkets. It has grown steadily during the specified times.
Although it has a wealth of market knowledge and leads the combined South-Central Mumbai submarkets, the company still has to face competition from a variety of local and national real estate developers. Applying for this IPO is advised in order to benefit from listing gains as the offering appears reasonably priced at P/E of 35.64.
Geojit Financial Services: Enroll
SEDL is sold at a P/Bv of 3.3x (FY24E Annualized) at the upper price band of Rs. 360, which seems quite reasonable. On a short- to medium-term basis, we assign a “Subscribe” rating because of its steady growth in both the top and bottom lines, strong return ratios, asset-light business model, potential for redevelopment, and optimistic industry outlook.
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With a strong brand presence, design and execution skills, in-depth knowledge of the real estate market, and numerous marketing initiatives, the company has grown its business successfully by offering differentiated product offerings.
