Rustomjee to announce Rs.1000 Cr IPO
Mumbai based Keystone Realtors, the corporate structure of Rustomjee Builders, is expected to file its draft red herring prospectus (DRHP) with SEBI for its proposed public issue.
While the details are awaited, the overall issue size is estimated to be around Rs.1,000 crore. Rustomjee is well respected for its premium range of properties in the Mumbai region. Rustomjee may look to time the IPO with the turnaround in housing market.
Recently, Keystone Realtors (Rustomjee Group) had raised around Rs170 crore through a private placement of shares. This pre-IPO round saw participation from several marquee names like HDFC, IIFL and the family of Jagdish Master. Incidentally, Jagdish Master happens to be one of the early founders of the Enam financial services group along with Nemish Shah and Vallabh Bhansali.
In the last 2 years, only 2 realty companies have taken the public issue route. The first was Macrotech Developers (Lodha Group), which came out with the public issue of Rs.2,000 crore followed by Shriram Properties which had recently raised Rs.600 crore through the IPO route.
There is one more West based builder, Puranik Builders which has already filed for its IPO and has also got approval from SEBI. Its IPO is scheduled to be launched this year.
Rustomjee Group has a relatively strong presence in the Western and Central suburbs of Mumbai and had reported sales of Rs.2,680 crore during financial year FY22.
It currently has an overall development portfolio of 20 million SFT of completed projects, 9.2 million SFT of ongoing projects under development and close to 16.4 million SFT of proposed projects for development across the Mumbai Metropolitan Region. It has marquee towers to boot.
The issue also looks like a case of good timing. In the last few quarters, the Indian realty sector; especially the residential housing segment has seen a sharp recovery.
This has been triggered by several factors like historically low interest rates, steady supply of quality projects, demand stimulation in the form of registration fee waiver and buyers getting their preference for realty investments back in the light of the volatility of financial assets.
According to a recent study by Anarock Property Consultants, housing sales in the top seven cities were up 71% in the year 2021 compared to 2020. While a good part of it could be the post-COVID recovery, there is also a genuine surge in home demand.
That is evident from the fact that over 2.37 lakh units were sold and inventory of unsold properties in major cities is rapidly falling. MMR led the way with 76,400 units, followed by the NCR region.
Even Cushman & Wakefield is of the view that the realty sector may have gone through the much needed consolidation in the last 3-4 years. The medium term impact of some of the key reforms like RERA and GST are also showing up. Also, most corporate have cleaned up their balance sheets during the pandemic. At the same time, confidence in investing in properties is coming back and easy finance options have accentuated that trend.
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