Suraj Estates Developers IPO opens today: Should you subscribe to the issue?

The initial public offer (IPO) by Suraj Estates Developers got opened for bidding on Monday. The developer is offering its shares in the price range of Rs 34-360 apiece, with a lot size of 41 equity shares and multiples thereafter. The bidding process will conclude on Wednesday, December 20.

Established in 1986, Suraj Estates Developers specialises in the development of residential and commercial real estate in the South-Central Mumbai region. Notably, the company relies entirely on third-party contractors for the construction services of its projects, as it does not provide any in-house construction services.

Suraj Estate Developers has garnered over  Rs 120 crore from 11 anchor investors including Jagdish Master managed Quantum-State Investment Fund, Blue Lotus Capital, Lighthouse Canton, Societe Generale, BNP Paribas and Meru Investment Fund, SBI General insurance Company Limited and Tata Housing Opportunities Fund, allotting 33.33 lakh equity shares at Rs 360 apiece.

Through its Rs 400 crore IPO, Suraj Estates Developers plans to sell 11,111,111 fresh equity shares. The net proceeds from the IPO will be allocated towards the repayment and/or prepayment of the aggregate outstanding borrowings of the company and its subsidiaries. Funds will be utilized for the acquisition of land or land development rights and general corporate purposes.

Suraj Estate has been a real estate developer in the South Central Mumbai area, working on projects in both the residential and commercial sectors. The residential portfolio of the company is situated in the sub-markets of Mahim, Dadar, Prabhadevi, and Parel. It has shown consistent growth over the stated periods, said Swastika Investmart.

"With extensive market knowledge, it is a market leader in the combined South-Central Mumbai submarkets; yet, the company must contend with competition from a range of national and regional real estate developers. The IPO is coming at a P/E of 35.64 which looks fairly priced so we recommend applying for this IPO for listing gains," it said.

Suraj Estate Developers boasts a track record of completing 42 projects in the South-Central Mumbai region. The company currently has 13 ongoing projects and 16 upcoming projects, having developed over 10 lakh square feet of land in Mumbai. It operates in the 'value luxury' and 'luxury' segments, catering to various price categories.

Suraj Estate has a long experience and expertise in real estate business with a well- diversified portfolio across price points, unit sizes and sub-markets. The company’s revenue is distributed evenly between luxury and value projects. Suraj Estate has EBITDA margins of 49 per cent and has reported superior ROE of 50 per cent, said Arihant Capital Markets.

"The company has a robust pipeline of upcoming projects with a carpet area of 8,43,192 sq ft. The company plans to launch 3 projects out of upcoming 16 projects with a topline of Rs 1,000 crore before March 2024 and is confident of maintaining current margins and return ratios. The company is comfortable maintaining its margins and return ratios," it added with a 'subscribe for long term' tag.

ITI Capital and Anand Rathi Securities serve as the book running lead managers for the Suraj Estate Developers IPO, with Link Intime India appointed as the registrar for the issue. The listing of Suraj Estate Developers shares on both BSE and NSE is likely on December 27, Tuesday.

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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