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Industry : REAL ESTATE

Keystone Realtors View all IPOs

Price Band

Rs. 514 – 541

KEYSTONE REALTORS is going public with a Fresh Issue and an Offer for Sale. The issue opens on 14th November 2022.

MOJO CALL

Why

Neutral

MOJO CALL

Avoid

Neutral

1. Good Brand

Keystone Realtors operates under the "Rustomjee" brand, which has a good reputation in the real estate industry.
The company is well-known for its high-quality construction and design.

2. Unorganised to Organised

The real estate industry is transitioning from an unorganised to an organised sector as a result of RERA and other government initiatives.
For the established players like Keystone, this presents opportunities.

3. But High Borrowings

The company has greater borrowings than its competitors.
As of June 2022, the outstanding debt is Rs 1,469 crore.
With rising interest rates, the company's bottom line and real estate demand may suffer.

4. Sector Fancy on the Decline

In 2022, the real estate sector index has decreased by 6%.
Due to higher borrowing costs that affect real estate demand and the perception that the sector has reached its peak, investors' appetite for it is waning.

5. Valuations

The company will have a market cap of Rs 6,200 crore (based on the upper price band).
Taking into account the sector fancy on the decline and the rising interest rate, we rate this IPO as Neutral.

This analysis takes into account the company's future rather than listing gains. It is also not based on our big data analysis.

Issue Details

Issue Opens	14th November 2022
Issue Closes	16th November 2022
Price Band	Rs. 514 – 541
Issue size (Upper Band)	Rs. 635 Crs
Issue Type	Fresh Issue & OFS
Market cap (based on upper band)	Rs. 6189 Crs
Sales-March 2022 (Rs. Crs)	1269
Net Profit - March 2022 (Rs./Crs)	136
Industry	REAL ESTATE
Promoters	Boman Rustom Iran
Lead Manager	Axis Capital Limited

Objective of the Issue

Details

The Objectives of the Offer are to:

Fulfill full or partial repayment/prepayment of certain borrowings obtained by the Company and/or certain of its Subsidiaries.

Fund the acquisition of future real estate projects and general corporate purposes.

List of Shareholders Selling Their Stake

NAME	TYPE	Proceeds from Sale of Equity Shares for OFS	% of Total Offering (OFS)
Boman Rustom Irani	Promoter	Rs 37.5 Crs	50%
Percy Sorabji Chowdhry	Promoter	Rs 18.75 Crs	25%
Chandresh Dinesh Mehta	Promoter	Rs 18.75 Crs	25%

Business Operations

About Company

Keystone Realtors operates primarily in the MMR region under the brand name "Rustomjee."

As of June 30, 2022, the company had 32 Completed Projects, 12 Ongoing Projects, and 21 Forthcoming Projects in the Mumbai Metropolitan Region ("MMR"), that includes a comprehensive range of project under the affordable, mid and mass, aspirational, premium, and super premium categories.

The company has delivered over 20 million square feet and has a 34 million square foot pipeline.

Residential projects generate 95% of the revenue.

Revenue Breakup by Residential Categories
	FY22	FY21	FY20
Affordable	7.0%	5.8%	11.4%
Mid & Mass	0.0%	14.0%	42.4%
Aspirational	0.7%	0.7%	-
Premium	66.8%	61.4%	20.4%
Super Premium	25.5%	18.2%	25.7%

Financials

Financial Overview

In FY22, the company reported a revenue of more than Rs. 1269 crore and a net profit of Rs. 136 crore.

When compared to its peers, the company has a higher debt-to-equity ratio.

Total borrowings are Rs 1469 crore as of June 2022.

Financial Performance (Rs/crore)

(Rs/cr)	Quarter	Quarter	Annual	Annual	Annual
	Jun-22	June-21	Mar-22	Mar-21	Mar-20
Sales	169	84	1269	849	1211
Net profit	4	-1	136	232	14