Rustomjee Group firm Keystone Realtors' IPO opens: 10 key things to know

Mumbai-based realty firm Keystone Realtors’ initial public offering (IPO) opened for subscription on November 14. The company sells properties under the brand 'Rustomjee'.

According to reports, the realtor commands a market share of 28 percent in Khar, 23 percent market in Juhu, 11 percent in Bandra East, 14 percent in Virar, 3 percent in Thane, and 5 percent in Bhandup in terms of absorption (in units) from 2017 to 2021.

Here are 10 key things to know about the issue:

1. IPO and allotment dates

The company is looking to raise Rs 635 crore through the public issue that will close on November 16. The tentative date for the basis of allotment is November 21.

2. Price band

The price band has been fixed at Rs 514-541 a share.

3. Offer details

The offer comprises a fresh issuance of shares worth Rs 560 crore and an offer for sale (OFS) of Rs 75 crore by selling shareholders.

As part of the OFS, promoter Boman Rustom Irani will sell shares worth up to Rs 37.5 crore. Shares worth Rs 18.75 crore each will be offloaded by Percy Sorabji Chowdhry and Chandresh Dinesh Mehta.

Also read: Rustomjee: A rising Mumbai developer hits the stock market

4. Objectives of the issue

As per the red herring prospectus (RHP), the company will utilise the net proceeds towards funding the repayment/prepayment of borrowings to the tune of Rs 341.6 crore. The proceeds will also be used to fund the acquisition of real estate projects and for general corporate purposes.

5. Lot size

Retail investors can bid for a minimum of 27 shares and multiples thereof. The minimum investment for a retail investor works out to Rs 14,607 at the upper end of the price band for 31 shares.

6. Company profile and  industry

Founded in 1995, Keystone Realtors is one of the prominent real estate developers in Mumbai. As of March 31, 2022, the company had 32 completed projects and has 12 ongoing projects and 19 forthcoming projects across the Mumbai Metropolitan Region (MMR) that includes a comprehensive range of projects under the affordable, mid and mass, aspirational, premium and super premium categories.

7. Financials

For Q1FY23, the company’s consolidated revenue stood at Rs 168.5 crore and net profit came in at Rs 4.22 crore. In FY22, total revenue was Rs 1,269 crore with a net profit of Rs 135 crore.

8. Strengths and concerns

The company focuses on entering joint development agreements and re-development agreements with landowners or developers, which requires lower upfront capital expenditure than the direct acquisition of land parcels. This is a key strength, according to experts.

A key concern is a significant increase in prices, taxes and levies or a delay in the supply of construction materials that could adversely affect the estimated construction cost. “Shortage of land for development in the MMR may also impact the business prospects,” HDFC Securities said in a note.

9.  Key management personnel

Chairman and managing director Irani is a first-generation real estate developer and entrepreneur with more than 26 years of experience in the real estate industry. Mehta, who is the company's director, is in charge of re-development and has significant experience in engineering, construction and technology field. Chowdhry heads sales, marketing and human resource functions.

10.  Listing date and Grey Market Premium

The tentative listing date is November 24. Shares of Keystone Realtors have not started trading in the grey market yet, so the GMP is nil as of now, said a market observer.