In an interview with CNBC Tv-18 on November 24, Boman Rustom Irani, Chairman & MD, Keystone Realtors spoke about the company's stock market debut. The stock got listed at Rs 555 per share and was up about 2.5 percent from its issue price of Rs 541.
Talking about the company's journey and the positive response the Mumbai-based realtor received, Irani thanked Keystone's investors and spoke at length about the company's plans for the redevelopment of Mumbai and the Mumbai Metropolitan Region(MMR).
Edited excerpts from the interview:
Before the listing you said that you're not looking to get out of the Mumbai markets anytime soon, but with competition coming through, especially in the affordable segment such as players from down south increasing their presence in Mumbai, would you consider expanding geographically?
Mumbai is one of the largest markets in the country at this moment . There are many good developers already existent out here, and there are plenty of developers who wish to come into this market and make it a stronghold for themselves. I think this market has ample room for all of us to grow our base out here.
More importantly, what we've seen over the last ten years is that this business has become more and more organized. And we have a lot of larger listed or branded players who continue to grow their market share, whereas for the smaller developers and non-organized developers, the market share, at least as far as the customer point of view is concerned, has reduced.
This only means that there's a lot more room available for us and all the good competition that comes into the city. The city brings out the best and Mumbai Metro Area brings out the best in most of us. And I wish that the best will continue to grow.
The company had a Rs 1,200 crore debt at some point. Could you give us an updated number for the debt in the books and tell us where is it headed?
It's been a 26 year journey where we've been to the school of hard knocks, learnt a lot of lessons. We grew a lot with our debt that we took at one point of time until we realized that debt was very good as a short term friend, not very good in the long run.
This year, I think the debt you're talking about, the secured debt that we had on our books, was about Rs 901 crores, and we plan to bring it down to Rs 560 crores with the amounts raised through our listing itself. This will allow us to further to maintain a one to one debt to equity ratio to maintain it healthy, and this would allow us to continually grow our development in Mumbai and MMR.
And as we are all aware we at Rustamji have been doing redevelopment since 2003, and we have very many redevelopments that we've completed more than 1400 plus redeveloped homes.
And today, the city, needs sprucing up, it needs a younger creation of newer buildings, better lifestyle for our residents. And I see the government doing that hugely in terms of the infrastructure that they are building. With the kind of money that we've raised, we're looking at putting a lot into growth, and that's our plan for the future. We plan to stay in Mumbai and MMR for redevelopments,for joint developments, joint ventures with partners.
What are margins at right now and how do you see it tracking from here on? Rustomji, is a well known brand in Mumbai and MMR. So why not use that as a go to brand of the market or are there any limitations?
I'd like to just say that Mumbai and MMR will continue to be our mainstay. We will continue to be here. I will talk about Rustamji's investment philosophy. We normally do not invest more than 10 percent of the gross revenues of the project till we are go to market. When I say go to market, it means that we are ready for sales. And the time that we try to do this in about a year's time of clocking a project in because approvals, etc. are there. And we work on 35 percent gross margins for most of the projects that we enter. We enter in a project only if it's got 35% plus gross margins going forward.
If you look at the last four years, your annual trajectory has gone up from almost Rs 1,000 crores in FY 20 to Rs 2,600 crores at the end of FY 22 in terms of pre-sales. How much do you think on an average, could the growth be for you given your launch pipeline?I'm not sure I'm at liberty to speak about numbers in actuality. All I can say is that our growth trajectory has been phenomenal given the post Covid buying that took place, and of course the support that came in from the RBI by reducing of interest rates at the same point of time by the government of Maharashtra, by reducing stamp duty, really helped a lot. So, this led to a lot of very good buying in the last few years. I think we will continue to grow at probably healthy margins.