Arkade Developers shares expected to list at nearly 50% premium over IPO price on Tuesday as GMP surges

Arkade Developers shares to be listed on the bourses on September 24.

Arkade Developers shares will be listed on the exchanges on September 24 after the issue received bumper subscription of 106.40 times on its initial share sale. The Rs 410-crore maiden share sale got bids for 252 crore shares as against 2.37 crore shares on offer. Earlier, the realty firm raised Rs 122.40 crore from anchor investors.

Arkade Developers is a real estate development company with a significant presence in Mumbai. The shares are commanding a grey market premium in the range of Rs 64, signalling a listing premium of nearly 50 percent.

The company boasts a strong presence in strategically advantageous locations in Mumbai, with a mix of new and redevelopment projects. The company has demonstrated consistent revenue growth and positive financial metrics, reflecting its solid fundamentals.

Shivani Nyati, Head of Wealth, Swastika Investmart Ltd. noted the IPO's valuation appears competitive and fair, further enhancing its appeal to investors. "Given the company's strong fundamentals, strategic focus, and robust investor response, Arkade Developers is well-positioned for a successful listing and potential long-term growth," she added.

The company had a price band of Rs 121-128 per share for its Rs 410-crore IPO, which was entirely a fresh issue of equity shares worth Rs 410 crore with no offer-for-sale (OFS) component.

Proceeds from the issue will be used for the development of the company's ongoing as well as upcoming projects, funding the acquisition of future real estate projects and general corporate purposes.

Sagar Shetty, Research Analyst at StoxBox added the company is set to make a robust debut on the stock exchanges on September 24, 2024, with an expected premium of around 66 percent above the upper price band.

"Arkade Developers has demonstrated substantial financial growth, with a revenue CAGR of 66.5% from FY22 to FY24. The company's Profit After Tax (PAT) increased impressively from Rs. 508.4 million in FY23 to Rs. 1,228.1 million in FY24. Its Return on Capital Employed (ROCE) also rose significantly from 24.3% in FY23 to 47.3% in FY24, highlighting the company's efficient capital utilization to drive growth and enhance profitability," he added.

As one of the leading developers in Mumbai’s micro markets, the company presents a compelling investment opportunity. Mumbai, known for its expansive and high-value real estate market, saw significant growth in housing supply and absorption rates in the past, creating ample development opportunities.