Signature Global IPO: Listing today, stock may debut at 10-11% premium

Signature Global IPO - Listing today: Signature Global shares may list at a 10-11% premium over the IPO price on the exchanges on September 27 owing to the company’s loss-making history and increased borrowings even as the strong brand gives it a good market position. Despite the unfavourable balance sheet, the public issue was subscribed 12.5 times and analysts expect the stock to list somewhere around Rs 428 against the issue price of Rs 385. The company’s grey market premium (GMP) rose to Rs 43 on September 26, implying a listing price of Rs 428.

The public issue opened for subscription on September 20 and closed on September 22. Through the IPO, the real estate developer raised Rs 730 crore. The offer comprised a fresh issue of shares worth Rs 603 crore and an offer-for-sale of shares worth Rs 127 crore by the International Finance Corporation.

According to Shivani Nyati, Head of Wealth, Swastika Investmart Ltd, Signature Global listing is expected to be around Rs 428. “The company has strong brand recognition and a large land bank. It is also well-positioned to benefit from the growing demand for affordable housing in India. However, the company has a loss-making history and faces concentration risk,” she said.

The company’s net loss narrowed to Rs 63.7 crore in FY23 from Rs 115.5 crore in FY22. Total income jumped to Rs 1,585.88 crore in the year ended March 2023 from Rs 939.6 crore in the year-ago period.

"The company is also facing stiff competition from other real estate developers. Still, the IPO was well received by investors and subscribed 12.5 times, which justifies this premium, and thus we can expect a decent listing of this IPO," Shivani Nyati added.

Signature Global will use the proceeds for the re-payment or pre-payment, in full or in part, of certain borrowings and will infuse funds in certain of its subsidiaries, namely Signatureglobal Homes, Signatureglobal Developers, Signatureglobal Business Park and Sternal Buildcon for re-payment or pre-payment. The remaining funds will be utilised for inorganic growth through land acquisitions and general corporate purposes.

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