About the company:

Established in 1995, Keystone is one of the prominent real estate developers in Mumbai and Mumbai Metropolitan Region. Company operates in various segments that includes a comprehensive range of projects under the affordable, mid and mass, aspirational, premium and super premium categories, all under “Rustomjee” brand. Company’s projects include high-value and affordable residential buildings, premium gated estates, townships, corporate parks, retail spaces, schools, iconic landmarks and various other real estate projects.
They focus on entering into joint development agreements, redevelopment agreements with landowners or developers or societies, and slum rehabilitation projects, which requires lower upfront capital investment compared to direct acquisition of land parcels, ensures that capital allocation is balanced and calibrated, allowing them to generate revenue with lower initial investments. As seen below, they derive majority of their revenue from redeveloped projects.

Company commands a market share of 28% in Khar, 23% market in Juhu, 11% in Bandra East, 14% in Virar, 3% in Thane and 5% in Bhandup in terms of absorption (in units) from 2017 to 2021. So far, they have completed 32 projects and developed 20.05 million square feet of real estate projects, as of March 31, 2022. Following section highlights more details about the projects.

Distribution network of Keystone Realtors Limited:

As of March 31, 2022, they had 1,476 channel partners who present the Rustomjee portfolio to their customers and drive customers traffic to their projects.

Key Financials:

Key risks:

1. Company is focused in MMR (Mumbai Metropolitan Region) primarily so no huge geographical diversification.
2. Overall real estate as a sector has seen very minimal growth in last couple of years.
3. It is capital intensive business and right now we are living in increasing interest rate environment.
4. Property litigations is common in India and may be prolonged over several years.

Comparison and Basis for issue price:
Considering the upper price band of 541 per share, it translates into PE of 39x and PB ratio of 5.1x (based on June 2022 book value of 104 INR).

IPO details and subscription:

The IPO starts on 14^th Nov 2022 and will end on 16^th Nov 2022 with an issue size of Rs. 635 Cr (560 Cr Fresh issue for debt repayments of the Company and for the growth of business and rest figure of 75 Cr is offer for sale). The lot size will be 27 shares and a retail investor can apply for a maximum of 13 lots. The price band offered by the company is Rs. 514 – 541 per share.