Keystone Realtors Limited IPO subscribed 8% on Day 1; retail portion subscribed 12%

The initial public offering (IPO) of Keystone Realtors Limited, which popularly operates under the brand name “Rustomjee” opened on November 14. On the first day, the IPO was subscribed 8%, receiving bids for 7.18 lakh shares as against issue size of 86.47 lakh shares. 

According to the data available on the Bombay Stock Exchange, the retail and non-institutional investors bought 12% and 11% of the shares allotted to them, respectively. Moreover, of the 24.70 lakh shares which were reserved for the qualified institutional buyers, 756 shares were bought on the first day. Through the public issue, the real estate company is planning to raise ₹635 crore. The offer comprises an offer for sale of ₹75 crore and a fresh issuance of shares worth $560 crore.

The real estate company had filed the draft red herring prospectus (DRHP) with the securities and exchange board of India (SEBI) on June 13, 2022, and received SEBI’s approval on October 17. 

The IPO of the Mumbai-based realtor will close on November 16. The company which primarily operates across the Mumbai Metropolitan Region (MMR), has so far completed 32 realty projects. The company is primarily focused on providing high-value and affordable residential buildings, premium gated estates, townships, corporate parks, retail spaces, schools, iconic landmarks, and other real estate projects. The company is promoted by Boman Rustom Irani, Percy Sorabji Chowdhry and Chandresh Dinesh Mehta. Irani holds a 46.31% stake in the company, whereas Chowdhry and Mehta holds 23.46% stake, respectively in the company. 

As per the company’s DRHP, the company’s consolidated revenue from operations for the April to June quarter of this year, stood at ₹176 crore, whereas the company’s net profit after tax stood at ₹4.22 crore. 

Here are key things to know about the IPO:

1. Through the OFS, the company’s promoters Irani will sell shares worth ₹37.5 crores, whereas Chowdhry and Mehta will sell shares worth ₹18.75 each, respectively. 

2. The Keystone Realtors IPO lot size is 27 shares. A retail investor can make a minimum investment of ₹14,607 per lot, and a maximum investment of ₹1,89,891 per 13 lots. 

3. The tentative date for the basis of allotment is on November 21. The price band of the IPO has been fixed at ₹514 to ₹541 per share.

4. Through the IPO, the company propose to utilise the net proceeds towards repayment/prepayment, in full or part, of certain borrowings by the company and/or certain of the subsidiaries. The funding will also be utilised in the acquisition of real estate projects as well as other corporate projects. 

Brokerage firms on Keystone IPO:

BP Equities- The brokerage firm BP Equities has given a subscribe call for the Keystone Realtors Limited IPO. The analysts at brokerage firm say, “On the upper end of the price band, the issue is valued at a P/E of 38.8x based on FY22 earnings which we feel is fairly priced as it has RONW of 15% as on FY22 which is the highest amongst peers as per RHP and we, therefore, recommend to “SUBSCRIBE” the IPO.

KR Choksey- The brokerage firm KR Choksey has given a subscribe call for the IPO. The analysts at the brokerage firm say, “The current value is appealing from a long-term viewpoint, given the average industry P/E of 96.5x, according to the company RHP. The company is trading at a P/B ratio of 5.8x its FY22 book value, with the highest RONW among its peers at 15.0%. With a strong brand and upcoming construction opportunities, we believe it is well placed, and as a result, we recommend that Keystone Realtors Ltd IPO be rated ‘SUBSCRIBE.’

Reliance Securities- Reliance Securities has given a subscribe call for the IPO. Analysts at Reliance Securities say, “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 leading position in Mumbai Real estate market, strong pipeline of ~35mn sq. ft. of saleable area, strong track record with decent financials, and attractive valuation, we recommend to subscribe the issue.”