Shares of Mumbai-based realty firm Keystone Realtors made a muted debut on stock exchanges. The stock listed at ₹555 on NSE and BSE, a premium of just 2.5 percent to its issue price of ₹541.
The stock hit a high of ₹570, up 5.3 percent from the issue price in intra-day deals.
The ₹653 crore initial public offering (IPO) of Keystone, which sells properties under the brand 'Rustomjee', was open between November 14-16 and has a price band of ₹514-541 per share.
According to the Red Herring Prospectus (RHP), the company's IPO size has been reduced from ₹850 crore earlier.
The IPO received a decent response from investors and was subscribed 2.01 times. According to the data from BSE, the investors made bids for 1,73,72,394 equity shares compared to the 86,47,858 equity shares offered. The quota for retail bidders was subscribed 0.53 times, whereas the allocation for non-institutional investors fetched 3.03 times bids. The portion for qualified institutional bidders was booked 3.84 times.
The issue consisted of a fresh issue of equity shares aggregating up to ₹560 crore and an Offer-For-Sale (OFS) worth ₹75 crore by promoters.
As part of the OFS, promoter Boman Rustom Irani will sell shares worth up to ₹37.5 crore, while Percy Sorabji Chowdhry and Chandresh Dinesh Mehta will offload shares worth ₹18.75 crore each.
The firm raised over ₹190 crore from anchor investors. It has allotted 35.21 lakh equity shares to 16 anchor investors at ₹541 apiece. Abu Dhabi Investment Authority (ADIA), Morgan Stanley and Saint Capital accounted for nearly 35 percent of the anchor investor portion.
Founded in 1995, Keystone Realtors has 32 completed projects, 12 ongoing projects and 19 forthcoming projects across the Mumbai Metropolitan Region (MMR).
The realty firm has developed 20.05 million square feet of high-value and affordable residential buildings, premium gated estates, townships, corporate parks, retail spaces, schools, iconic landmarks, and other real estate projects as of March 2022.
The realtor posted a revenue and EBITDA growth of 2 percent and 15 percent, respectively, over FY20-22. Its EBITDA margin expanded to 14.1 percent in FY22 from 11.2 percent in FY20.
It reported a 208 percent growth in its profit at ₹135 crore in FY22, led by lower interest costs. For the June quarter, it reported revenue of ₹170 crore, an EBITDA margin of 2.2 percent and a PAT of ₹4.2 crore.
Most brokerages advise subscribing to the issue due to a strong track record and pipeline, decent financials, and attractive valuation.
"Based on FY22 earnings, the company is valued at 45.4x P/E, 41.7x EV/EBITDA and 5.9x EV/ Sales. Keystone is a prominent player in the real estate space. While the company had been inconsistent with its top and bottom lines for the past few years, we believe that the uptick in the real estate sector and softening of inflationary pressure augured well for Keystone. In the view leading position in Mumbai Real estate market, a strong pipeline of ~35mn sq. ft. of saleable area, strong track record with decent financials, and attractive valuation, we recommend ‘subscribe' to the issue," said Reliance Securities.