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Suraj Estate Developers files for an IPO, to raise Rs 500 Crs

Posted On: 2022-03-07 18:20:52 (Time Zone: IST)

Mumbai-based real estate players Suraj Estate Developers, one of the market leaders in combined markets of Mahim, Matunga, Dadar, Prabhadevi, and Parel markets has filed its draft red herring prospectus (DRHP) with the markets 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. The issue has a face value of Rs 5 per equity share for the proposed share sale. The Offer is being made through the Book Building Process, wherein at least 75% of the Offer shall be available for allocation to Qualified Institutional Buyers, not more than 15% of the Offer shall be available for allocation to Non-Institutional Bidders and not more than 10% of the Offer shall be available for allocation to Retail Individual Bidders.

The Mumbai-based firm is one of the market leader in rehabilitation projects in the South Central Mumbai sub markets. According to a company-commissioned Anarock report, it had launched 14 residential projects between 2016 and 2021, with 12 (86%) of them being redevelopment projects. It also has institutional clients like Saraswat Cooperative Bank Limited (Prabhadevi) and Clearing Corporation of India Limited (Dadar), for which it has constructed and sold built-to-suit corporate headquarters.

The proceeds from its fresh issuance worth Rs. 315 crores for the repayment or prepayment of borrowings, in full or part of all or certain borrowings for the company and its subsidairy, Rs 45 crore for acquisition of land or land development rights besides general corporate purposes.

Founded in the year 1986 by Rajan Meenathakonil Thomas, Suraj Estate Developers has been developing residential and commercial properties throughout the South Central Mumbai region. They are among the top two developers with 15.25% market share in terms of supply and rank third with 13.50% market share in terms of absorption in the residential sub-markets of Mahim, Matunga, Dadar, Prabhadevi, and Parel in South Central Mumbai region for calendar years 2016 to 2021.

The realtor through its emphasis on contemporary architecture, strong project execution capabilities, and quality construction, the real estate developers have established a strong brand and a successful track record in the real estate industry. As a result, it has a strong presence in the South Central Mumbai region, has generated significant brand recall in sub markets in this region, and substantial sales referrals from existing customers.

In the South Central Mumbai region, it has completed 42 projects with a total developed area of over 1,046,543 square feet. It also has nine ongoing projects with a total developable area of 1,970,445 square feet and a saleable RERA carpet area of 442,616 square feet, as well as 21 upcoming projects with a total carpet area of 928,400 square feet. It is present in the residential portfolio spanning numerous 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 competitors such as Macrotech Developers (Lodha Group), Oberoi Realty, Hubtown Developers, and D B Realty, it has formed an integrated in-house project management team that focuses on procurement efficiencies, vendor selection, and construction operations. It also has an in-house sales team, customer relationship team, and after-sales team, as well as a distribution network of multiple non-exclusive and select channel partners across India that caters to key high networth individuals and non-returning Indians from the property booking stage to final delivery.

It has land parcels in Bandra (West) and Santacruz (East) that will be developed in the future. It had Land Reserves of 10,359.77 square metres as of December 31, 2021, which it aims to grow in the coming years by utilising the complete FSI potential of more than index 2.0, subject to marketability and governmental clearances.

Suraj Estate Developers clocked a profit of Rs 6.28 crore in the financial year FY21 against Rs 1.52 crore in the previous year. Revenue during the year FY21 increased significantly to Rs 239.99 crore from Rs 86.93 crore in the previous year, an increase of 176.08%, primarily due to increase in sales on account of increase in sale volume of its projects namely, Palette (Dadar) and Ocean Star (Prabhadevi) and reduction of stamp duty from 5% to 2%.

Profit for the seven-months period ended October 2021 stood at Rs 11.90 crore on revenue of Rs 109.62 crore.

Centrum Capital Limited and Anand Rathi Advisors Limited are the book running lead managers to the issue.

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