About the Company:

Incorporated in 1986, the company is a residential real estate developer, focused primarily on construction and development of residential and commercial projects, in and around sub market of South-Central Mumbai. The company has a residential portfolio located in the markets of Mahim, Dadar, Prabhadevi and Parel and 100% of the revenue of the company is generated from this geography. It is focusing on Value luxury, Luxury segments & Commercial segment.

The Company does not provide any construction services on its own and is 100% dependent on third party contractors. Since incorporation, it has completed 42 projects with a developed area of more than 1.046 million square feet in the South-Central Mumbai region. In addition to the Completed Projects, it has 13 Ongoing Projects with a saleable carpet area 0.609 million square feet and sixteen 16 Upcoming Projects with an estimated carpet area of 0.744 million square feet. It has constructed and sold built-to-suit corporate headquarters to Saraswat Cooperative Bank Limited (Prabhadevi) and Clearing Corporation of India Limited (Dadar).

Industrial Overview:

Since, the company operates in the MMR Market, it is pertinent to look at the industry prospects of this geography

Increasing Home Loan Penetration:

Housing finance penetration witnessed improvement in 2020. The trend of housing finance penetration in urban areas suggests that urban areas will likely have a relatively greater share of future growth in housing finance almost reaching 50% of the total population. 

 The following graph shows the housing finance penetration in India from 2011 – 2020:

The following graph sets forth absorption outlook for MMR (Mumbai Metropolitan Region) from 2023 to 2026:

IPO Objectives:

1. Repayment/Prepayment of the aggregate outstanding borrowings of the company and its subsidiaries, Accord Estates Private Limited and Iconic Property Developers Private Limited.

2. Acquisition of land or land development rights.

3. General corporate purposes.

Financials:

The Company’s revenue from operations increased from Rs. 239.98 crores in FY 2020-21 to Rs. 305.74 crores in FY 2022-23 indicating a CAGR growth of 12.87%.

The company's EBITDA expanded from Rs. 86.62 Crores in FY 2020-21 to Rs.151.00 Crores in FY 2022-23, with a CAGR of 32.03%. However, the company’s EBITDA margin has increased from 36.09% in FY 2020-21 to 49.39% in FY 2022-23.

The company's Net Profit expanded from Rs. 6.27 Crores in FY 2020-21 to Rs. 32.06 Crores in FY 2022-23. Also, the company’s Net Profit margin has increase from 2.61% in FY 2020-21 to 10.49% in FY 2022-23.

The company's ROCE has improved from 14.51% in FY 2020-21 to 21.93% in FY 2022-23.

The ROE has increased from FY 2020-21 to FY 2022-23 being 23.62% in FY 2020-21 to 58.18% in FY 2022-23.

Valuation:

The company's price-to-earnings ratio stands at 35.64, while the industry's PE ratio is 43.58 excluding the outliers. Additionally, the company's price-to-book ratio is 16.01, whereas the industry's PB ratio is 2.82.

Peer Comparison

Key Risks:

1. 100% dependency on south central Mumbai’s real estate market:

The company’s business is dependent on the performance of, and the conditions affecting, the real estate sub markets in the South-Central Mumbai region. Factors beyond control, such as economic conditions, regulatory changes, and market fluctuations, pose challenges, potentially impacting financial stability and project valuations. Liquidity constraints and a potential sharp decline in real estate prices pose significant risk.

2. Competitive and Fragmented nature of industry 

 The industry in which it operates is competitive and highly fragmented resulting in increased competition that may adversely affect the results of the company.

3. Fluctuation in Supply Chain

The company is vulnerable to significant price hikes, taxes, and material shortages in construction, risking cost overruns and delays. Fluctuations in construction materials, contract labour, and equipment supply may adversely impact estimated costs and project timelines.

IPO Details: