July 21, 2024

KEYSTONE REALTORS LIMITED INITIAL PUBLIC OFFERING TO OPEN ON NOVEMBER 14, 2022

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Mumbai, November 10, 2022: Keystone Realtors Limited (the “Company”), which operates under the brand ‘Rustomjee’ and is one of the prominent real estate developers (in terms of absorption in number of units) in the micro markets that it is present in, will open its initial public offering on November 14, 2022.

The Price Band of the offer has been fixed at ₹ 514 to ₹ 541 per Equity Share of face value ₹ 10 each. Bids can be made for a minimum of 27 Equity Shares and in multiples of 27 equity shares thereafter.

The initial public offering comprises a Fresh Issue aggregating up to ₹ 5,600.00 million and an Offer for Sale of up to ₹ 750.00 million by the Selling Shareholders comprising up to ₹ 375.00 million by Boman Rustom Irani, up to ₹ 187.50 million by Percy Sorabji Chowdhry and up to ₹ 187.50 million by Chandresh Dinesh Mehta.

The Company intends to use the proceeds of the fresh issue for repayment/ prepayment, in full or part, of certain borrowings availed by the Company and/or certain of the subsidiaries; and funding acquisition of future real estate projects, and general corporate purposes.

This is an Offer in terms of Rule 19(2)(b) of the SCRR, read with Regulation 31 of the SEBI ICDR Regulations. The Offer is being made through the Book Building Process in terms of Regulation 6 (1) of the SEBI ICDR Regulations, wherein not more than 50% of the Offer shall be available for allocation on a proportionate basis to Qualified Institutional Buyers (“QIBs and such portion, the “QIB Portion”), provided that our Company and the Selling Shareholders, in consultation with the BRLMs, may allocate up to 60% of the QIB Portion to Anchor Investors on a discretionary basis (“Anchor Investor Portion”), out of which one-third shall be reserved for domestic Mutual Funds only, subject to valid Bids being received from domestic Mutual Funds at or above the price at which allocation is made to Anchor Investors (“Anchor Investor Allocation Price”), in accordance with the SEBI ICDR Regulations. In the event of under-subscription, or non-allocation in the Anchor Investor Portion, the balance Equity Shares shall be added to the QIB Portion (excluding the Anchor Investor Portion) (“Net QIB Portion”). Further, 5% of the Net QIB Portion shall be available for allocation on a proportionate basis to Mutual Funds only, and the remainder of the Net QIB Portion shall be available for allocation on a proportionate basis to all QIB Bidders, including Mutual Funds, subject to valid Bids being received from them at or above the Offer Price. However, if the aggregate demand from Mutual Funds is less than 5% of the Net QIB Portion, the balance Equity Shares available for allocation in the Mutual Fund Portion will be added to the remaining Net QIB Portion for proportionate allocation to QIBs. Further, not less than 15% of the Offer shall be available for allocation to Non-Institutional Bidders and (out of which one third shall be reserved for Bidders with Bids exceeding ₹ 200,000 up to ₹ 1 million and two-thirds shall be reserved for Bidders with Bids exceeding ₹ 1 million) and not less than 35% of the Offer shall be available for allocation to Retail Individual Bidders in accordance with the SEBI ICDR Regulations, subject to valid Bids being received from them at or above the Offer Price. All potential Bidders (except Anchor Investors) are mandatorily required to utilize the Application Supported by Blocked Amount (“ASBA”) process by providing details of their respective ASBA accounts and UPI ID in case of UPI Bidders using the UPI Mechanism, as applicable, pursuant to which their corresponding Bid Amount will be blocked by the Self Certified Syndicate Banks (“SCSBs”) or by the Sponsor Bank under the UPI Mechanism, as the case may be, to the extent of the respective Bid Amounts. Anchor Investors are not permitted to participate in the Offer through the ASBA Process.

The Equity Shares offered through Red Herring Prospectus are proposed to be listed on BSE and NSE.

Axis Capital Limited and Credit Suisse Securities (India) Private Limited are the Book Running Lead Managers.

Risk to Investors:

We carry risk of high debt as our business is capital intensive and requires significant expenditure for real estate project development, which we fund through financing from banks and other financial institutions. Our Debt / Equity ratio for the Fiscal 2022 is 1.62 as against the average of the listed peer group of 0.53. Further, we had Net Cash Outflow from Operating Activities of ₹ (1,095.51) million in Fiscal 2022. Negative operating cash flows over extended periods, or significant negative cash flows in the short term, could materially impact our ability to operate our business and implement our growth plans.

We carry geographical concentration risk. As of June 30, 2022, all our projects were located within the Mumbai Metropolitan Region (“MMR”) and we generated all of our revenue from operations from the MMR. The table below provides details of our total available inventory and unsold inventory in the MMR for our Completed and Ongoing Projects as of June 30, 2022:

Category Total Available Units for Sale Total Units Unsold Percentage of Total Available Units (%)
Completed Projects (A) 13,176 114 0.87%
Ongoing Projects (B) 4,627 1,748 37.78%
Total (A+B) 17,803 1,862 10.46%

 

Our revenues carry risk of concentration from residential projects. We almost entirely focus on residential projects, with very limited exposure to commercial and retail projects. Revenue from residential projects contributed 92.27%, 95.98%, 94.62%, 74.58% and 94.26% of Revenue from Operations for the Fiscals 2020, 2021 and 2022 and for the three months period ended June 30, 2021 and June 30, 2022, respectively.

We are also subject to the cost overruns including due to significant increases in prices or shortage of or delay or disruption in supply of construction materials. The construction cost (including material cost) as a percentage of Revenue from Operations was 74.37%, 72.20%, 77.89%, 77.77% and 79.26% in Fiscals 2020, 2021 and 2022 and the three months period ended June 30, 2021 and June 30, 2022, respectively.

Weighted average cost of acquisition per Equity Shares held by the Promoters or Selling Shareholders is as provided below and Offer Price at upper end of the Price Band is `541 per Equity Share.

Name of the Promoter or Selling Shareholder Weighted average cost of acquisition per Equity Share (in `) Lower End of the “Price Band” with “Floor Price” (` 514) is ‘X’ times the Weighted average cost of acquisition Upper End of the “Price Band” with “Cap Price” (` 541) is ‘X’ times the Weighted average cost of acquisition
Boman Rustom Irani 3.36 152.98 161.01
Percy Sorabji Chowdhry 3.36 152.98 161.01
Chandresh Dinesh Mehta 3.35 153.43 161.49

As certified by M R M & Co., Chartered Accountants, pursuant to their certificate dated November 8, 2022.

The two BRLMs associated with the Offer have handled 44 public issues in the past three years, out of which 18 issues closed below the offer price on listing date.

Name of BRLMs Total Issues Issues closed below IPO Price on listing date
Axis Capital Limited* 36 17
Credit Suisse Securities (India) Private Limited* 3 0
Common Issues of above BRLMs 5 1
Total 44 18

*Issues handled where there were no common BRLMs