Arkade Developers IPO Opens 16th Sept - Price Band ₹121-128/share

Arkade Developers Limited is a real estate development company focused on developing high-end, sophisticated lifestyle residential developments in Mumbai, Maharashtra. The company's business is divided into two main segments: development/construction of residential buildings on land acquired by the company (new projects) and redevelopment of existing buildings (Redevelopment Projects). Between 2017 and Q1 2024, the company launched 1,220 residential units and sold 1,045 residential units in various markets in MMR, Maharashtra. As of 30th June 2024, the company has developed 2.20 million square feet of residential properties. From CY 2003 to March 2024, the company has completed the redevelopment of 10 projects in the western suburbs of Mumbai and 1 project in south-central Mumbai (through a partnership firm in which the company held a majority stake) with a total built-up area of 1,000,000 square feet (approx.).

In the last two decades, Arkade Developers has completed 28 projects, including 11 projects on a standalone basis, 2 projects executed through partnership firms in which the Company held a majority stake, 8 projects executed by the promoter through his proprietorship, M/s Arkade Creations, and 9 projects through joint development agreements with other third parties. These projects have a total built-up area of more than 4.5 million square meters and have been awarded to over 4,000 customers. As of 30th June 2024, the company had 201 permanent employees and an additional 850 employees on a contract basis.

The Objectives of the Issue

Arkade Developers Limited intends to utilise the Net Proceeds from the Issue towards the following objectives:

1. Funding Development Expenses: This fund will partially cover the costs of developing the Ongoing Projects (viz. Arkade Nest, Prachi CHSL, and C-Unit).
2. Land Acquisition and General Corporate Purposes: Funding acquisition of yet-to-be-identified land for real estate projects and general corporate purposes.

Highlights of Arkade Developers IPO

Arkade Developers IPO is set to launch with a book-built issue of ₹410.00 crores. The issue is entirely fresh. Here are the key details of the IPO:

• The IPO opens for subscription on 16th September 2024 and closes on 19th September 2024.
• The allotment is expected to be finalised on 20th September 2024.
• Refunds will be initiated on 23rd September 2024.
• Credit of shares to Demat accounts is also expected on 23rd September 2024.
• The company will tentatively list on BSE and NSE on 24th September 2024.
• The price band is set at ₹121 to ₹128 per share.
• The fresh issue comprises 3.2 crore shares, aggregating to ₹410.00 crores.
• The minimum lot size for the application is 110 shares.
• Retail investors need to invest a minimum of ₹14,080.
• The minimum investment for small NII (sNII) is 15 lots (1,650 shares), amounting to ₹211,200.
• The minimum investment for big NII (bNII) is 72 lots (7,920 shares), amounting to ₹1,013,760.
• Unistone Capital Pvt Ltd is the book-running lead manager for the IPO.
• Bigshare Services Pvt Ltd serves as the registrar.

Arkade Developers IPO - Key Dates

The cut-off time for UPI mandate confirmation is 5:00 PM on 19th September 2024. This deadline is crucial for investors to ensure their applications are processed successfully. Investors are advised to complete their applications well before this deadline to avoid any last-minute technical issues or delays.

Arkade Developers IPO Issue Details/Capital History

The Arkade Developers IPO is scheduled from 16th September to 19th September 2024, with a price band of ₹121 to ₹128 per share and a face value of ₹10. The total issue size is 32,031,250 shares, raising up to ₹410.00 crores through a fresh issue. The IPO will be listed on both BSE and NSE. The pre-issue shareholding is 153,626,016 shares.

Arkade Developers IPO Allocation & Minimum Investment Lot Size

The IPO shares are allocated across different investor categories as follows:

Investors can place bids for a minimum of 110 shares, with additional bids required in multiples of this figure. The table below illustrates the minimum and maximum investment amounts for retail investors and HNIs, expressed in shares and monetary values.

SWOT Analysis: Arkade Developers Ltd

Strengths:

• Strong presence in the Mumbai real estate market
• Extensive experience in both new development and redevelopment projects
• Track record of completing 28 projects with over 4.5 million square meters of built-up area
• Focus on high-end, sophisticated lifestyle residential developments
• Diverse project portfolio including standalone, partnership, and joint development projects

Weaknesses:

• Geographical concentration in Mumbai, potentially limiting market diversification
• Dependence on the cyclical real estate market
• High capital requirements for land acquisition and project development

Opportunities:

• Growing demand for high-end residential properties in Mumbai
• Potential for expansion into other regions of Maharashtra or India
• Increasing urbanization and population growth driving demand for housing
• Opportunities in redevelopment projects in older parts of Mumbai

Threats:

• Intense competition in the Mumbai real estate market
• Regulatory changes affecting real estate development and pricing
• Economic downturns impacting housing demand and property prices
• Potential supply chain disruptions or cost increases in construction materials

Financial Highlights: Arkade Developers Ltd

Arkade Developers Limited has demonstrated strong financial growth, particularly in the most recent fiscal year. The company's assets have shown steady growth, increasing from ₹3,699.67 lakhs in FY22 to ₹5,750.05 lakhs in FY24, representing a growth of about 55.4% over two years. This increase in assets indicates expansion in the company's real estate portfolio and operational capabilities.

Revenue has seen significant growth, especially in FY24. It rose from ₹2,371.82 lakhs in FY22 to ₹6,357.12 lakhs in FY24, marking an impressive increase of 167.9% over two years. The year-over-year growth from FY23 to FY24 was particularly notable at 184%, indicating strong sales performance and project completions.

The company's profitability has seen a substantial improvement. Profit after tax increased from ₹508.44 lakhs in FY22 to ₹1,228.08 lakhs in FY24, representing a growth of 141.5% over two years. The year-over-year growth in PAT from FY23 to FY24 was 142%, showing improved operational efficiency and successful project deliveries.