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Keystone's modest debut: Does Street find value here?

As in the case of Macrotech Developers or Lodha Group, a subdued debut on the bourses by Rustomjee brand owner Keystone Realtors may belie longer-term outperformance, say analysts.

NOIDA / November 24, 2022 / 01:47 PM IST
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Keystone Realtors, a real estate developer associated with the Rustomjee brand, saw a tepid listing on November 24 on the back of the muted response to its maiden public issue and expected underperformance of the realty space amid rising interest rates on home loans that may hit demand.

The issue listed at a 2.6 percent premium to its issue price of Rs 541 per share. The initial public offering (IPO) was subscribed just 2.01 times during November 14-16, backed by qualified institutional buyers (QIBs) and high net-worth individuals (HNIs).

However, analysts are not that worried by the lack of retail investor response. They believe the company may have short-term challenges but there are enough positives, including a renowned brand, that make it a candidate for long-term play.

There is a precedent for their conviction as well. Last year, Macrotech Developers—which operates another renowned brand in Mumbai, Lodha—was also shunned by retail IPO investors initially but surprised the market with outperformance in the next few months.

“We may not simply assume the same kind of mirroring performance in Keystone Realtors (Rustomjee) but remain optimistic only for the long term,” said Prashanth Tapse, senior vice-president, research, Mehta Equities, a Mumbai-based online brokerage. “Considering the growth prospects with projects in hand and also considering that we expect the Indian real estate sector to do well in the next two-three years, we remain optimistic on Rustomjee.”

After debuting in April 2021, the Macrotech stock had tripled from its listing price by the end of the year. However, it has seen some selling since but still trades at a significant upside from the IPO price.

Narendra Solanki, head, equity research at Anand Rathi Share and Stock Brokers, said Keystone has become one of the prominent real estate developers in the micro markets it is present in.

“It has a diversified suite of projects across a wide range of price points, and a presence in several micro markets. Keystone has developed a strong brand that has encouraged stakeholders in the real estate development industry to prefer partnering with the company. We understand investors should hold Kaynes in the portfolio with a medium- to long-term perspective.”

The company has a good financial track record and has generated profits in the past three years with a diverse category of projects in hand. As of June 2022, Keystone had completed 32 projects, with 12 ongoing projects and 21 forthcoming projects across the Mumbai Metropolitan Region (MMR) under the Rustomjee brand.

One negative about the stock is its valuation. According to analysts, it commands a price-earnings multiple of 44 times its last 12 months’ earnings at the upper end of the price band.

“The IPO price band is a bit expensive,” said Ravi Singh, vice-president and head of research, Share India, another Mumbai-based online broking firm, adding, however, that the company has a good financial track and project record. He advised investors to hold their positions from a long-term perspective.

“Allottees who applied for the public offering for listing premium are advised to maintain their stop-loss at Rs 545 and wait for further upside, whereas those who have a medium- to long-term perspective can hold the stock and maintain their stop-loss at Rs 510,” said Pravesh Gour, senior technical analyst, Swastika Investmart, an investment advisory platform.

Disclaimer: The views and investment tips expressed by investment experts on are their own and not those of the website or its management. advises users to check with certified experts before taking any investment decisions.
Shubham Raj has five years of experience covering capital markets. He primarily writes on stocks with special focus on PMS-AIF industry, telecom and new-age companies. His last stint was with The Economic Times where he wrote on stock markets and led IPO reportage.
first published: Nov 24, 2022 12:01 pm