Subscribe to Parsvnath IPO for 1-2 years: India Infoline

Parsvnath Developers, PDL, the Delhi-based real estate developer, is open for subscription with an initial public offer, IPO to raise up to Rs 1,000 crore (Rs 10 billion).

The issue closes on November 10, 2006. The issue constitutes 18.30% fully diluted post-issue paid-up capital and the price band has been fixed between Rs 250 and Rs 300.
 
The issue comprises a net issue to the public of up to 3,30,38,000 equity shares and a reservation of up to 2,00,000 equity shares for subscription by employees.

The book running lead managers to the issue are Enam Financial Consultants, JM Morgan Stanley Financial Services and DSP Merrill Lynch.  Intime Spectrum Registry is the registrar to the issue.

The India Infoline report on Parsvnath Developers IPO:

Recommendation – Subscribe with 1-2 years time horizon

Company background

PDL is one of north India’s leading real estate development companies with around 3.5 million sq ft development space under its belt. The company has a land bank of 108.7 million sq ft spread across 41 cities in 14 states. PDL began operations by marketing real estate projects and from 1990 began constructing projects. The company maintains its business operations in the north India region with majority of the business coming from the NCR region.

Objects of the issue

PDL plans to raise proceeds through the public issue to finance the below given 11 projects, which would cost the company around Rs 14.3 billion. While Rs 10.9 billion would be raised from the current issue, the remaining portion of the cost would be financed through internal accruals.

Investment rationale

Strong industry growth prospects

Population growth and inward migration through increased employment have been the drivers of real estate markets worldwide. Strong economic growth, huge population, large skilled workforce, growing employment, and increasing purchasing power has kick started the growth in real estate market in India.

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Investment rationale

Concerns

Valuations