IPO Update: Mumbai based Suraj Estate Developers files papers to raise Rs 500 cr

Suraj Estate Developers, a Mumbai-based real estate player that is a market leader in the combined markets of Mahim, Matunga, Dadar, Prabhadevi, and Parel, has filed a draught red herring prospectus (DRHP) with market regulator Securities and Exchange Board of India (SEBI) to raise Rs 500 crore through an initial public offering (IPO) with a fresh issue of shares.

For the proposed share sale, the issue has a face value of Rs 5 per equity share. The offer is being made through the Book Building Process, in which at least 75% of the offer is available for allocation to Qualified Institutional Buyers, 15% of the offer is available for allocation to non-institutional bidders, and 10% of the offer is available for allocation to retail individual bidders.

A total of Rs 315 crore will be used to repay the company’s and its subsidiaries’ debts, including Accord Estates, Iconic Property Developers, and Skyline Reaalty and amount of Rs 45 crore will be spent on land acquisition or land development rights, with the remainder going to general corporate purposes.

The company, founded in 1986 by Rajan Meenathakonil Thomas, has been involved in the real estate business since 1986, developing real estate in the residential and commercial sectors in the South Central Mumbai region.

According to an Anarock report commissioned by the company, it launched 14 residential projects between 2016 and 2021, with 12 (86%) of them being redevelopment projects. It also has institutional clients such as Saraswat Cooperative Bank (Prabhadevi) and Clearing Corporation of India (Dadar), for whom it has built and sold custom corporate headquarters.

The company has completed 42 projects in the South Central Mumbai region, with a total developed area of over 1,046,543 square feet. It also has nine ongoing projects totaling 1,970,445 square feet and a saleable RERA carpet area of 442,616 square feet, as well as 21 upcoming projects totaling 928,400 square feet. It can be found in the residential portfolio at a variety of price points in the “value luxury” and “luxury” segments, with unit values ranging from Rs 10.00 million to Rs 130.00 million.

To compete with Macrotech Developers (Lodha Group), Oberoi Realty, Hubtown Developers, and D B Realty, it has formed an integrated in-house project management team focused on procurement efficiencies, vendor selection, and construction operations.

It will develop land parcels in Bandra (West) and Santacruz (East) in the future. As of December 31, 2021, it had 10,359.77 square metres of land reserves.

In the fiscal year FY21, the company made a profit of Rs 6.28 crore, up from Rs 1.52 crore the previous year. The revenue for FY21 increased significantly to Rs 239.99 crore from Rs 86.93 crore the previous year, an increase of 176.08 percent, primarily due to an increase in sales due to an increase in sale volume of its projects, namely Palette (Dadar) and Ocean Star (Prabhadevi), and a reduction in stamp duty from 5% to 2%. Profit for the seven months ended October 2021 was Rs 11.90 crore on revenue of Rs 109.62 crore.

Suraj Estate developers’ IPO will have a 75% reservation for Qualified Institutional Buyers (QIB). Non-Institutional Investors (NII) will be able to bid on 15% of the issue, while retail investors will only be able to bid on 10% of the total issue.

After being listed on the stock exchanges, the company will join peers such as Oberoi Realty, Godrej Properties, Prestige Estate Projects, Shriram Properties, and others.

Currently, the promoter and promoter group own approximately 95% of the company. Centrum Capital and Anand Rathi Advisors are the issue’s book running leads managers. The company’s shares will be listed on the BSE and NSE.