Signature Global (India) IPO opens today: Should you subscribe to the issue?

The Rs 730-crore initial public offering (IPO) of Signature Global (India) opens for bidding on Wednesday, September 20. The three-day bidding will conclude on Friday September 22. The company is offering its shares in the price band of Rs 366-385 per share with a lot size of 38 equity shares and its multiples thereafter.

Signature Global claims to be the largest real estate development player in the National Capital Region of Delhi (Delhi-NCR) in affordable and lower mid-segment housing. It develops commercial, residential, and retail projects mainly in the northern cities, including Gurugram, Ghaziabad and Karnal .

The issue includes a sale of fresh equity shares of Rs 603 crore, while its selling shareholder International Finance Corporation, a World Bank Group member, will offload shares worth Rs 127 crore via offer-for-sale (OFS) route.  The company has trimmed its issue size by about 28 per cent as it was earlier intending to raise about Rs 1,000 crore via primary markets.

The company intends to utilize the net proceeds from the fresh share sale towards repayment of debts amounting to Rs 432 crore, while the remaining funds shall be used for inorganic growth through land acquisitions and general corporate purposes. The OFS amount, however, will go to the selling shareholder.

Signature Global sold 27,965 residential and commercial units, all located within the Delhi NCR region as of March 2023. It focuses on central and state government policies supporting affordable housing in order to assist customers in realizing their dream of having their own home.

Signature Global clocked a net loss of Rs 63.7 crore, with consolidated revenue from operations at Rs 1,553.6 crore for the year ended on March 31, 2023. However, its net loss stood at Rs 115.5 crore with a revenue at Rs 901.3 crore in the previous financial year 2021-22.

Signature Global raised Rs 318.5 crore from 19 anchor investors including Nomura Trust, Eastspring Investments, Lion Global Investment, Troo Capital, Segantii India Mauritius, Morgan Stanley, BNP Paribas Arbitrage - ODI, Goldman Sachs and Copthall Mauritius Investments on Monday, September 18. It has finalised allocation of 82,72,700 equity shares at Rs 385 per share.

The reservation for qualified institutional bidders in the Signature Global's IPO is 75 per cent, while non-institutional investors (NIIs) will get 15 per cent of the offering. Retail investors will be awarded with the remaining 10 per cent of the offer.

ICICI Securities, Kotak Mahindra Capital Company and Axis Capital are book-running lead managers to the issue, while Link Intime India will act as the registrar for the issue. Shares of the company will be listed on both BSE and NSE.


StoxBox by BP Equities
Rating: Avoid
Signature Global generated positive operating cash flows despite incurring significant business development expenses for growth and without significantly increasing the leverage. Though the company has a good market share in its focused regions, its continued losses in the last three financial years make us cautious about the IPO, said StoxBox with an 'avoid' rating for the issue.

Sushil Finance
Rating: Neutral
The company has posted losses for the last three fiscals. Keeping in mind the real estate industry & fluctuating demand style is a concern. Looking at both opportunities and challenges faced by the company and keeping the further performance of the company, Cautious investing by cash surplus investors as and when the performance turns around, said Sushil Finance.
 

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.

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