Arkade Developers, a fast-growing real estate developer, with a presence in the Mumbai Metropolitan (MMR) is set to launch its initial public offer (IPO). This move marks a major step for the company as it looks to raise funds to expand its operations.
The IPO will open for subscription from September 16 to September 19. The company is looking to raise ₹410 crore at the upper end of the price band. The issue is priced in the range of ₹121 to ₹128 per share.
The offer is entirely a fresh issue of ₹410 crore with no offer for sale component, suggesting the funds raised will go to the company.
Key Details of Arkade Developers IPO:
| IPO Date | 16 Sept - 19 Sept |
| Price Band | ₹121 to ₹128 per share |
| Issue Size | 32,031,250 shares (Up to ₹410 crore) |
| Lot Size | 110 shares |
| Listing At | BSE, NSE |
| Tentative Listing Date | 24 Sept |
IPO Objective: The company plans to utilise the funds raised via the public offer as follows:
- Funding the development of ongoing projects
- To fund the acquisition of future real estate projects
- General corporate purposes
About Arkade Developers
Incorporated in 1986, Arkade Developers is a prominent real estate company specialising in building premium and sophisticated residential projects in Mumbai, Maharashtra. The company's operations are categorised into two main areas: Developing and constructing residential properties on newly acquired land and redeveloping existing structures.
It has developed 4.5 million square feet of space across 28 projects, catering to nearly 4,000 customers in the span of the last two decades.
Historically its focus was on the western suburbs of MMR, with the company being among the top 10 developers in terms of supply in Borivali West, Goregaon East and Santacruz West micro-markets from 2017. In recent years, it has developed high-end luxury projects in South Mumbai and undertaken projects in the eastern suburbs.
The company has a low net debt-to-equity ratio of 0.14 despite being in the capital-intensive realty business as most of the projects are financed through a mix of promoter equity and internal accruals.
The company has six ongoing projects, with new projects and three redevelopment projects. It has sold nearly 75% of the units in these ongoing projects. As of fiscal 2024, the new projects contributed 69% to the overall revenue.
A look at the financial performance of the company suggests strong growth. Its revenue has surged 184% year-on-year while profit has jumped 142%.
| Parameter | FY 24 | FY 23 | Growth (%) |
| Revenue (₹ crore) | 635.71 | 224.01 | 183.79% |
| PAT (₹ crore) | 122.81 | 50.77 | 141.89% |
Strengths & Risks of Arkade Developers IPO
Strengths
- Arkade Developers has established a robust presence in Mumbai, India's commercial capital and one of the most lucrative real estate markets in the country. From CY 2021 to Q1 2024, the Mumbai Metropolitan Region has led the top seven Indian cities in residential unit sales. Over this period, capital values in the region have increased by approximately 26%. Additionally, the average basic selling price of residential properties in MMR rose by 13% from 2023 to Q1 2024, reflecting ongoing strong demand and market growth.
- Experienced promoters and a strong and technically proficient team help Arkade Developers adapt quickly to any gauge changes in market conditions and customer demand, thus maintaining a competitive edge.
- A crucial factor in Arkade Developers' success and expansion has been their consistent ability to complete projects on or ahead of schedule. This track record of timely delivery has significantly contributed to their growth and reputation over the years.
Risks
- The company's business is entirely concentrated in the MMR region of Maharashtra. Any developments that adversely affect the region's market could hurt Arkade Developers' business as well.
- Location and the area surrounding the land parcel are crucial factors that impact the saleability of the projects. Failure to successfully identify projects for redevelopment or acquire land for new projects could hurt the business.
- The time from acquiring land to delivering the property to the first customer is about three years. Any delays in finishing the projects on time could lead to increased costs and affect the company's business prospects.
How to Apply For Arkade Developers IPO?
To apply for the Arkade Developers IPO via INDmoney, follow these steps:
- Download the INDmoney app and create a free account by completing the KYC process.
- Click on the INDstocks tab, followed by IPOs.
- In the 'Explore IPOs' section, find 'Live IPOs.'
- Click 'Apply' to view the key details of the IPO.
- Choose the number of lots you wish to apply for and continue with the application.
- Place your order via UPI. The funds for your IPO application will be held in your bank account until the shares are allocated.
Conclusion
This article highlights the key advantages and risks of investing in Arkade Developers' IPO. However, for a more thorough understanding of the company's business and financials, investors should carefully go through the RHP and conduct their own research. You should also consider your own risk appetite and financial goals before investing in the IPO.
FAQs
What is Arkade Developers IPO?
Arkade Developers IPO is a mainboard IPO worth ₹410 crore. It is priced at ₹121 to ₹128 per share. The IPO will open on September 16 and close on September 19.
What is the minimum lot size for Arkade Developers IPO?
One lot of Arkade Developers is of 110 shares. A retail investor will need to shell out ₹14,080 (cut-off price) to subscribe to one lot of the IPO.
What is the purpose of Arkade Developers IPO?
Arkade Developers plans to utilise IPO money to fund the company's growth initiatives, including funding ongoing projects and the acquisition of new real estate projects.
When is the expected listing date for Arkade Developers' shares?
Arkade Developers shares are expected to list on BSE and NSE on 24 September.