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Rustomjee Group firm Keystone Realtors lists at 2% premium to issue price

The company’s initial public offering had seen lacklustre response from investors as the offer was subscribed just 2.01 times during November 14-16

November 24, 2022 / 10:02 AM IST

Mumbai-based realty firm Keystone Realtors made a tepid debut on the bourses listing at 2.6 percent premium to its issue price of Rs 541 per share. The stock started trading at Rs 555 on the NSE and BSE.

The company’s initial public offering had seen lacklustre response from investors as the offer was subscribed just 2.01 times during November 14-16. Qualified institutional buyers bought shares 3.84 times the allotted quota and high networth individuals 3 times, but retail investors bid for only 0.53 times of the portion set aside for them.

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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).

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.

In 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.

It 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.

“Keystone Realtors IPO price band is bit expensive as per the valuations. However, the company has a good financial track record and has generated stable profits in the past 3 years with a diverse category of projects in hand. Investors may hold their positions from a long term perspective," said Ravi Singh, Vice President and Head of Research, Share India.

Also Read: IPO Street is buzzing but retail investors are not too excited

However, a key concern for the company is 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.

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first published: Nov 24, 2022 09:59 am