Keystone Realtors, a group company of Mumbai-based real estate player Rustomjee, has filed the draft red herring prospectus with markets regulator Securities and Exchange Board of India (SEBI) to raise ₹850 crore through an initial public offer (IPO).

The initial share sale comprises fresh issue worth ₹700 crore and shares worth ₹150 crore being offered by promoters. Under the offer for sale portion, Boman Rustom Irani will offload shares worth ₹75 crore, while Percy Sorabji Chowdhry and Chandresh Dinesh Mehta will offer equity shares worth ₹37.5 crore each.

Of the net proceeds from the IPO, ₹427 crore will be utilised for repayment or prepayment during fiscal 2023, in full or part, of certain borrowings availed by the company and its subsidiaries. Remainder of the proceeds will be used to fund acquisition of future real estate projects, and general corporate purposes. The amount to be utilised for funding acquisition of future real estate projects and general corporate purposes will not individually exceed 25% of the gross proceeds respectively, and will not collectively exceed 35% of the gross proceeds, the DRHP clarifies. This will be done over a period of two fiscals from the date of listing of the equity shares.

Rustomjee is a prominent real estate developer in terms of absorption in the number of units in the micro markets that it operates in. The company holds a market share of 28% in Khar, 23% in Juhu, 11% in Bandra East, 14% in Virar, 3% in Thane, and 5% in Bhandup in terms of absorption of units from 2017 to 2021, according to an Anarock report.

As of March 31, 2022, Rustomjee has 32 completed projects, 12 ongoing projects and 19 forthcoming projects across the Mumbai Metropolitan Region (MMR), which include a comprehensive range of projects under the affordable, mid and mass, aspirational, premium and super premium categories.

As of March 31, 2022, Rustomjee claims to have 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 various other real estate projects.

For the fiscal ended March 2021, Rustomjee had reported a net profit of ₹231.82 core, compared to ₹14.49 crore in the year-ago period. Revenue from operations in FY21 slipped to ₹848.72 crore from ₹1,211.47 crore in FY20. Adjusted EBITDA stood at ₹149.45 crore in FY21, against ₹193.43 crore in FY20. The company reported an adjusted EBITDA margin of 17.61%, up from 15.97% in the year-ago period. Net debt slipped to ₹980.20 crore from ₹ 2,156.28 crore.

For the nine months ended December 2021, Rustomjee posted net profit of ₹95.82 crore, while revenue from operations stood at ₹1,035.58 crore. Adjusted EBITDA for the period was ₹143.97 crore, while adjusted EBITDA margin was 13.90%.

For the issue, Rustomjee has roped in Axis Capital Limited and Credit Suisse Securities (India) Private Limited as book-running lead managers (BRLMs). Link Intime India Private Limited has been appointed the registrar for the issue.

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