The initial public offering (IPO) of Arkade Developers opens for bidding today, that is, Monday, September 16. The realty player is offering its shares in the range of Rs 121-128 apiece, which can be subscribed till Thursday, September 19. Investors can apply for the issue, bidding for a minimum of 110 equity shares and its multiples thereafter.
Arkade Developers is a real estate development company focused on developing high-end, sophisticated lifestyle residential developments in Mumbai, Maharashtra. The company's business can be divided into two segments: fresh construction of residential buildings on land acquired by the company and redevelopment of existing buildings. The Rs 410 crore IPO of Arkade Developers entirely includes a sale of 3.
20 crore fresh equity shares. The net proceeds from the issue shall be utilized towards funding as part of the costs to be incurred in developing the Ongoing Projects and funding acquisition of yet-to-be-identified land for real estate projects and general corporate purposes. Ahead of its IPO, Arkade Developers has raised Rs 122.
40 crore from nine anchor investors as it issued 95,62,500 shares at Rs 128 per share. The anchor book included names like BNP Paribas Financial Markets -- ODI, Societe Generale-ODI and Saint Capital Fund. Arkade is involved in the development of new projects and the redevelopment of existing buildings.
The company launched 1,220 residential units and sold 1,045 residential units in various markets in MMR, Maharashtra between 2017 and June 30, 2024. It has developed 2.20 million square feet of residential properties as of Q1FY25.
In the last two decades, it has completed 28 projects including 11 projects on a standalone basis including 2 projects executed through partnership firms. The company held a majority stake, 8 projects executed by the promoter through his proprietorship, Arkade Creations, and 9 projects through joint development agreements. Arkade Developers reported a net profit of Rs 122.
81 crore with a revenue of Rs 635.71 crore for the financial year ended on March 31, 2024. The company's bottomline came in at Rs 50.
77 crore with a revenue of Rs 224.01 crore in the fiscal year 2022-23. Arkade Developers has reserved shares worth Rs 2 crore for the eligible employees of the company.
50 per cent of the net issue has been allocated towards qualified institutional bidders (QIBs), while 15 per cent of the shares have been reserved for non-institutional investors (NIIs). Retail investors will have 35 per cent of the net offer reserved for them. Unistone Capital is the sole book running lead manager of the Arkade Developers IPO, while Bigshare Services is the registrar for the issue.
Shares of the company shall be listed on both BSE and NSE, with September 24 as the tentative date of listing of shares. Here's what brokerage firms said about the IPO of Arkade Developers: Arkade Developers is a real estate development company specializing in premium lifestyle residential properties. It focuses on two key areas: new developments and redevelopment projects.
Its operations are strategically based in the MMR, particularly in the western suburbs. It has successfully completed 28 projects, said Choice Broking in its IPO note. "With a steady increase in the number of units sold, the company has shown strong growth in both revenue and profitability.
The issue is asking for an EV/Sales ratio of 3.2 times, which is at a discount to peers. This business growth strategy, along with its near debt-free status and consistent on-time project delivery, positions for sustainable growth in the future, it said with a 'subscribe' tag.
The company is valued at FY24 P/E multiple of 19.3 times at the upper price band of Rs 128 based on post-issue capital. The issue appears to be attractively priced given the excellent execution track record, healthy market share in the identified micro-markets, strong balance sheet and the growth potential of the real estate industry in the MMR, said SBI Securities.
"The funds raised through the IPO will be utilised for acquiring land parcels which will further boost the development pipeline. We recommend subscribing to the issue for both listing gains as well as long term investment horizon," he said. Arkade Developers plans to expand into the eastern region of the Mumbai Metropolitan Region, Maharashtra, with a mix of commercial and residential developments, said StoxBox.
"The current issue is priced at a P/E ratio of 15.8 times based on FY24 earnings, which is relatively lower compared to its peers," it added with a 'subscribe' for a medium to long-term rating. Arkade Developers is strategically positioned to leverage the growing demand for real estate in MMR, driven by rapid urbanization.
Its strong brand recognition in MMR, Maharashtra, with proven customer-centric approach, strengthens its competitive position in the market, said Arihant Capital. "Financial growth is expected to be fueled by its upcoming projects, a strategic focus on developments in Mumbai's eastern suburbs, and its blended business model. On a post-issue basis, the company trades 14.
46x EV/EBITDA (FY24). We have a 'subscribe' rating for the issue," it added. Considering the FY24 EPS of Rs 6.
61 on a post-issue basis, the company is going to list at a P/E of 19 times with a marketcap of Rs 2,376.14 crore, whereas its peers, namely Keystone Realtors, Godrej Properties, Macrotech Developers and Suraj Estate Developers are trading at P/E ratios of 42-99 times, said Marwadi Financial Services. "We assign “Subscribe” rating to this IPO as the company is a leading player and an established developer in, MMR, Maharashtra Also, it is available at reasonable valuation as compared to its peers," it said.
Arkade Developers is a leading real estate company in Mumbai, is well-positioned to capitalize on the growing demand for residential/commercial and redevelopment projects in the city. Focused on the mid-premium segment, the company employs an asset-light model, collaborating through joint ventures to deliver high-quality residential spaces, said KR Choksey Finserv. Its ROE and ROCE stand at an impressive 47% showcasing strong returns, supported by efficient project management and execution capabilities.
The company's strengths include a solid reputation for timely delivery, a strong foothold in the MMR, and the ability to leverage redevelopment opportunities, it added with a 'subscribe' rating. Arkade’s combination of high-margin new projects and stable redevelopment activities ensures sustained profitability and growth potential. While competition is strong, the company’s focus on luxury residential developments and its strategic market positioning provide a competitive edge, said Canara Bank Securities.
"As the offer is only for fresh issuance of shares, the IPO proceeds will be utilised only for funding business growth. This issue is available at P/EPS of 15.84 times as on FY2024, which appears less than peers.
We recommend to 'subscribe' this issue for long-term gains," it said..
