Arkade Developers IPO Day 1: GMP, subscription status, key dates, review, other details. Apply or not?

Arkade Developers IPO: Arkade Developers Ltd, a real estate company, is ready to make its debut on the bustling primary market day. Ahead of its initial public offering, the company secured ₹122.40 crore from anchor investors. The company set a price range of ₹121-128 per share for its ₹410-crore initial public offering. The public subscription for the initial share sale will be open from today (Monday, September 16) and will close on Thursday, September 19.

The issue's lot size is 65 equity shares and in multiples of 65 equity shares thereafter. Arkade Developers IPO has reserved 50% of the shares in the public issue for qualified institutional buyers (QIB), 15% for non-institutional Institutional Investors (NII), and 35% of the offer is reserved for retail investors. The employees have been allocated equity shares worth up to ₹2 crores, and they are being given a discount of ₹5 per share.

Arkade Developers, a rapidly expanding real estate development firm, has a strong presence in Mumbai. By July 31, 2023, it has successfully developed 1.80 million square feet of residential property, including through partnership entities in which Arkade holds the majority stake.

From 2017 to Q1 2023, the company has introduced 1,040 residential units and sold 792 residential units in various markets in the Mumbai Metropolitan Region (MMR) in Maharashtra.

The revenue of Arkade Developers in fiscals 2023, 2022, and 2021 was ₹224.01 crore, ₹237.18 crore, and ₹113.18 crore, respectively.

According to the red herring prospectus (RHP), Keystone Realtors Ltd is a listed peer of the company, and it has a P/E ratio of 74.85. Godrej Properties Ltd, another listed peer, has a P/E ratio of 111.53. Macrotech Developers Ltd, also a listed peer, has a P/E ratio of 78.46. Suraj Estate Developers Ltd, the final listed peer, has a P/E ratio of 40.92.

Arkade Developers IPO Subscription Status

The initial public offer of Arkade Developer has been subscribed 5.79 times on the first day of subscription today, as per BSE data.

The initial share sale received bid for 13,76,23,090 shares against 2,37,75,719 shares on offer, according to BSE data.

The portion for retail investors received 8.03 times subscription while the quota for non-institutional investors got subscribed 7.89 times. The qualified institutional buyers (QIBs) part is booked 24%. The employee portion has been subscribed 7.63 times. 

Arkade Developers IPO Review

Choice Equity Broking Pvt Ltd

According to the brokerage's research, the company is a real estate development business that specialises in luxurious residential homes in Mumbai, Maharashtra, India's commercial center. New developments and redevelopment projects are the company's two main areas of concentration. The MMR, especially the western suburbs, serves as the strategic foundation for the company's activities. 28 projects have been successfully completed by Arkade Developer during the previous 20 years. The company's revenue and profitability have grown significantly as a result of a consistent increase in the number of units sold.

Arkade Developer seeks an EV/Sales ratio of 3.2x, which is lower than the peer average, at the upper end of the pricing range. Although Arkade Developer has recently moved into the eastern suburbs of Mumbai, the firm has historically focused on the western suburbs of MMR.

Arkade Developer is positioned for long-term, sustainable growth thanks to its corporate expansion plan, its almost debt-free status, and its reliable, on-time project delivery. For this reason, the brokerage suggests giving this issue a "SUBSCRIBE" rating.

Marwadi Financial Services

As per the brokerage firm, with a post-issue share price of ₹6.61, the company is expected to debut on the stock exchange at a P/E ratio of approximately 19x, resulting in a market capitalisation of ₹2,376.14 Cr. This stands in contrast to its counterparts, namely Keystone Realtors Limited, Godrej Properties Limited, Macrotech Developers Limited, and Suraj Estate Developers Limited, which are currently trading at P/E ratios of approximately 99x, 88x, 62x, and 42x, respectively.

“We assign “Subscribe” rating to this IPO as the company is a leading player and an established developer in, MMR, Maharashtra. Also, it is available at reasonable valuation as compared to its peers,” the brokerage said.

Arkade Developers IPO details

The Arkade Developers IPO, worth ₹410 crore, includes a fresh issuance of 32,031,250 equity shares with a face value of ₹10. There is no "offer for sale" component.

As per the RHP, the company, in consultation with the book running lead manager (BRLM), has carried out a Pre-IPO Placement of 1,626,016 equity shares at a price of ₹123 per Equity Share (inclusive of a premium of ₹113 per Equity Share) amounting to ₹20 crore (Pre-IPO Placement). Due to the Pre-IPO Placement, the size of the fresh issue of up to ₹430 crore has been decreased by ₹20 crore, resulting in the revised size of the Fresh Issue being up to ₹410 crore.

The Arkade Developers IPO is being managed by Unistone Capital Pvt Ltd as the book running lead manager, with Bigshare Services Pvt Ltd acting as the registrar for the issue.

Arkade Developers IPO GMP today

Arkade Developers IPO GMP today or grey market premium is +80. This indicates Arkade Developers share price were trading at a premium of ₹80 in the grey market, according to investorgain.com.

Considering the upper end of the IPO price band and the current premium in the grey market, the estimated listing price of Arkade Developers share price was indicated at ₹208 apiece, which is 62.5% higher than the IPO price of ₹128.

'Grey market premium' indicates investors' readiness to pay more than the issue price.

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.