About the company

Incorporated in the year 2014, Signature Global (India) Limited is the largest real estate development company in the National Capital Region of Delhi (Delhi NCR) in the affordable and lower mid segment housing in terms of units supplied. The company has sold 27,695 residential and commercial units as of 31^st March 2023.

The company has strategically focused on the Affordable Housing Segment (below Rs.40,00,000 price category) and the Middle-Income Housing Segment (between Rs.25,00,000 to Rs.40,00,000).

As of March 31, 2023, the company has 12 Completed Projects with a land area of 94.68 acres and an aggregate Saleable Area of 6.15 million square feet and has sold 10,737 units (98.08% of total units) of the Completed Projects.

In addition, as of March 31, 2023, the company had 29 Ongoing Projects with a land area of 216.57 acres and an aggregate Saleable Area of 17.21 million square feet and 19 Forthcoming Projects with a land area of 379.07 acres and an aggregate estimated Saleable Area of 21.29 million square feet.

The table below sets forth certain key operational information relating to the company’s projects, as of March 31, 2023:

Industry overview

India is one of the fastest growing economies in the world driven by several factors such as its demography, large domestic consumption base, growth in investments into the country (in-bound investment), exports of services, etc.

In 2022, India overtook the UK to become the world’s fifth biggest economy, after the US, China, Japan. and Germany. India showed robust growth in FY 2022-23 amidst prevailing global headwinds and rising inflation and recorded a growth of 6.8%, the highest among major economies worldwide.

Real estate sector is an important contributor to country’s economy, and its role in terms of growing market size and share in India’s GDP is well appreciated by the Government of India.

Housing or residential asset class form a part of real estate sector in India, that has witnessed several changes in the last four years and it is by and large catered by the private sector.

According to Anarock, housing sales increased 48% YoY to Rs. 3.47 lakh crore in the past financial year due to larger volumes and better price realisation.

Main factors governing housing scenario are ability of buyers to purchase houses and ability of developers to create housing stock for buyers to buy. Government’s policies and initiatives as facilitating measures also are a factor among others, being affordability, home loan interest rates and penetration of home loans as a facility for the home buyers.

IPO Objectives

1. Re-payment or pre-payment, in full or in part, of certain borrowings availed by the company.

2. Infusion of funds in certain of the subsidiaries, namely Signature Global Homes, Signature Global Developers, Signature Global Business Park, and Sternal Buildcon for repayment or prepayment, in full or in part, of certain borrowings availed by the subsidiaries.

3. Inorganic growth through land acquisitions.

4. General corporate purposes

Financials

The company's revenue witnessed significant growth, surging from Rs. 82.06 crores in FY 2020-21 to Rs. 1,553.57 crores in FY 2022-23, achieving an impressive CAGR of 335.12%. Similarly, the company's EBITDA transformed from a loss of 58.29 crores in FY 2020-21 to a profit of 215.56 crores in FY 2022-23. Nevertheless, it is important to note that the company experienced a net loss in all three years under consideration.

Key Risks

1. The business and profitability of the company are significantly dependent on the performance of the real estate market in the Delhi- NCR region, generally, and particularly in Gurugram and Sohna micro-markets in Haryana. For FY 2022-23, 53.69% of the revenue from operations was generated from Gurugram and 36.56% of the revenue from operations was generated from Sohna. Fluctuations in market conditions may affect the ability of the company to sell its projects at expected prices, which may adversely affect the revenues and earnings.

2. An inability of the company to complete its Ongoing Projects and Forthcoming Projects by their respective expected completion dates or at all could have a material adverse effect on its business, results of operations and financial condition.

3. There are certain outstanding litigation proceedings involving the Company, Subsidiaries, Directors, Promoters and Group Companies, an adverse outcome in which, may have an adverse impact on the company’s reputation, business, financial condition, results of operations and cash flows.

Valuation

The IPO's valuation cannot rely on the PE (Price-to-Earnings) basis due to its negative earnings per share. On a P/B (Price-to-Book) basis, the IPO appears overvalued as the company's PB ratio stands at 101.05, significantly higher than the average PB ratio of its industry peers, which is 3.93.

Peer Comparison

Macrotech Developers Limited appears to lead in terms of revenue, but when considering profitability among its peers, DLF Limited, Prestige Estate Projects, and Sobha Limited emerge as the primary contenders. Signature Global (India) Limited appears to fall behind the industry in both revenue and profitability.

IPO Details