Suraj Estate Developers Limited have been involved in the real estate business since 1986 and develop real estate across the residential and commercial sectors in South Central Mumbai region. They have a residential portfolio located in the markets of Mahim, Dadar, Prabhadevi and Parel, which are sub-markets of the South-Central Mumbai micro market where They have established their presence. They are focused primarily on value luxury, luxury segments and commercial segment. They are now venturing into residential real estate development in Bandra sub-market. Further, the Company has completed 4 projects in preceding three Financial Years. From 1986 to 2023, They have completed 42 residential and commercial projects out of which 41 projects (97.62%) are redevelopment projects. So they are delivering on an average 3 to 4 projects in 3 years. Although, the completion of 4 projects in last 3 years is in line with Company’s historical average delivery rate, there was some delay caused during the Covid-19 pandemic during such period. The focus area of operation is the South-Central region in Mumbai mainly consisting of Mahim, Matunga, Dadar, Prabhadevi and Parel, as the expertise lies is in the redevelopment of tenanted properties under Regulation 33(7) of the Development Control and Promotion Regulations (“DCPR”) in the Mumbai region. They identify cessed/ noncessed properties with existing tenants, and tie up with the landlords of such tenanted properties by entering into a development agreement or on outright purchase basis through conveyance deed. The Company does not provide any construction services on its own and is 100% dependent on third party contractors for the construction services of its Projects. Since incorporation, they have completed forty-two (42) projects with a developed area of more than 1,046,543.20 square feet in the South-Central Mumbai region. In addition to the Completed Projects, they have thirteen (13) Ongoing Projects with a developable area of 20,34,434.40 square feet and saleable carpet area 6,09,928 square feet and sixteen (16) Upcoming Projects with an estimated carpet area of 7,44,149 square feet. In the residential portfolio, they are present across the “value luxury” and “luxury” segments across multiple price points with unit values ranging from Rs 10.00 million to Rs 130.00 million. In the commercial portfolio, they have constructed and sold built-to-suit corporate headquarters to the institutional clientele namely, Saraswat Cooperative Bank Limited (Prabhadevi) and Clearing Corporation of India Limited (Dadar). To cater to the increasing need for smaller independent offices in the commercial segment, they plan to foray into developing boutique office spaces on Tulsi Pipe Road, Mahim. As per financial performance, Suraj Estate Developers Limited has posted total income / net profits of Rs 244.00 Cr / Rs 6.28 Cr (FY21), Rs 273.91 Cr / Rs 26.50 (FY22), Rs 307.89 Cr / Rs 32.06 Cr (FY23) and Rs 102.81 Cr / Rs 14.53 Cr (upto Q1 FY24). So as per previous financials data, company has shown average growth. Company has an average EPS of Rs 8.16 and average RoNW of 58.77% for last three fiscals. Issue is priced at a P/BV of 13.27 as per NAV of 27.12 as on 30.06.23. If we attribute latest earnings of FY22, FY23 and annualised FY24 on fully diluted equity post issue, then asking price is at a P/E of around 60.26, 49.81 and 27.48 respectively, which looks over priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, two lead managers are associated with this IPO, and have handled around 5 IPOs in last three fiscals. ITI Capital Limited : This is 3rd IPO from this BRLM. From last 2 IPOs, all are opened above issue price or at par on the day of listing. As of now, from last 2 IPOs, one is trading below issue price and remaining are trading above issue price or at par. (As on 08.12.2023) Anand Rathi Advisors Limited : This is 4th IPO from this BRLM. From last 3 IPOs, all are opened above or at par on the day of listing. As of now, from last 3 IPOs, all are trading above or at par of issue price. (As on 08.12.2023) As per financials, Suraj Estate Developers Limited Limited has average growth, RoNW is 58.18% and P/E is respectively 60.26, 49.81 and 27.48 as per FY22, FY23 and annualised FY24 earnings. So, issue looks over priced. Company is in business of real estate re-development in south central Mumbai region, which is highly competitive segment. Performance of BRLM is good. So, we give NEUTRAL rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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