Arkade Developers IPO Day 4: GMP, subscription status, review. Apply or not?

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Arkade Developers IPO Day 4: GMP, subscription status, review. Apply or not?

Arkade Developers IPO day 4 : The ₹410 crore book-built issue of real estate developer Arkade Developers opened on Monday, September 16, and closed for subscription after four days. The IPO subscription will close on Thursday, September 19, 2024. The NIIs and retail investors have lapped up the issues with much confidence in the growth potential.

IPO Subscription Status

Till the end of Day 4, the IPO of Arkade Developers has been grossly subscribed. Its IPO was subscribed 106.83 times until 7 pm on September 19 by the Bombay Stock Exchange (BSE). It clearly shows that the demand for this company’s shares is very high in the market.
 

The subscription data breakup is as follows:

Retail Investors: The retail portion of the IPO was subscribed 51.39 times.
Non-Institutional Investors (NIIs): The NII segment was attracted more and subscribed at a ratio of 163.02 times.
Qualified Institutional Buyers (QIBs): QIB segment got oversubscribed with the help of 163.16 times.
These figures are indicative of healthy demand for the issue from all investor classes but, more importantly, are led by institutional investors. Subscription levels of this magnitude are often seen as a great omen, as it indicates strong positive sentiments regarding the company’s future prospects.

Anchor Investors Assured
The company had garnered approximately ₹122.40 crore from anchor investors prior to the opening of IPO launch. Anchor investors are essentially institutional investors who have been slated to purchase shares before the IPO opens up for public subscription. Their response is considered a vote of confidence on the company’s fundamental interest and growth potential. This pre-IPO investment, therefore, set solid foundations for the much-awaited public offering to encourage further participation by the other investors.

Grey Market Premium (GMP) Indication of Higher Demand An indirect idea about the demand for an IPO can be obtained from the grey market premium. Grey Market Premium refers to the unofficial price at which the shares of the company are being traded even before the stocks of the company are listed on the stock exchanges. As of today, 19th September, the grey market premium for Arkade Developers IPO had already reached ₹60 according to investorgain.com.

The GMP gives an idea of the price investors are willing to pay over and above the issue price for the stock. Now, in case the upper price band of the IPO happens to be ₹128, this gray market premium pegs the listing price at around ₹188. This works out to be a 46.88 percent premium over the issue price, which means the market expects good performance from the shares of Arkade Developers on listing.

Valuation and Growth Issues

Market experts and brokerage firms have mostly been positive about the IPO of Arkade Developers. They feel that this company’s valuations seem fair and the future looks promising for the development. Here are the in-depth views of the key brokerage firms below:

Choice Broking’s Take
Choice Broking advises a “subscribe” to the IPO of Arkade Developers. They state that at the high end of the price band, the enterprise valuation, as sought from the company, stands at 3.2 times, which actually is at a discount to its peers.

Traditionally an MSD company, Arkade Developers has grown largely on real estate projects in western suburbs of the MMR. However, of late, it has strategically expanded to the eastern suburbs of the city, which has opened up new avenues for growth. This, along with its near debt-free financial platform coupled with its steady and consistent project delivery positions the firm for sustained future growth.

Anand Rathi’s Analysis
Another brokerage firm, Anand Rathi, has also given a “subscribe” rating to the IPO. It says that at the upper price band, Arkade Developers is asking for a PE of 19.3 times and P/BV multiple of 3.2 times for FY24. Those are pretty reasonable multiples for the IPO.

Anand Rathi has also pointed out that the visibility of growth is well-established for Arkade Developers since it has already established its presence in MMR with financial stability. The company, with a market capitalisation post-issue of ₹2,376 crore, would be well-positioned to grab growth opportunities that open up in Mumbai’s real estate sector.

IPO Funds Utilisation
The raised amount through the issue will mainly be used at three accounts:

Funding Ongoing Projects: Of course, the firm would fund ongoing real estate projects of Arkade Developers. In this manner, all projects would be completed in due time and delivered right.

Purchasing New Land: The company would utilize some of the funds for land acquisition to be developed into real estate. This would result in more projects being brought to the portfolio and increase the company’s footprint in key areas.

General Corporate Purposes: This provision establishes funds specifically for general corporate expenses, which may include the working-capital requirements of the business in addition to other operational needs.

Overview of the Company and Business Strategy

Arkade Developers is a real estate development company; it majorly works on residential and commercial projects. The company has mainly operated in the Mumbai Metropolitan Region (MMR), especially in its western suburbs. Over the years, the company has built a strong position in being one of the rarely questioned timely delivery and quality construction companies, which has consequently aided in maintaining a customer base.

Recently, Arkade Developers has expanded its operations into the eastern suburbs of Mumbai, aiming to tap into the growing demand for residential and commercial properties in that area. This business growth strategy, coupled with its near debt-free status, positions the company for long-term success.

Its strength has primarily been on the back of a focus on developing affordable and mid-income housing stock, addressing the major chunk of the population of Mumbai. While affordability, together with a proven track record of project delivery from the company’s end, has been in strong testimony to its reputation in the market.

Arkade Developers IPO day 4 Details

Here are the key details on the initial public offer by Arkade Developers:

The issue size: The company wants to mop up Rs 410 cr from the issue.
Shares on offer: In the IPO, the company is offering a total of 3.2 crore shares.
Price band: The issue price band is Rs 121 – 128 per share.
Subscription dates: The IPO will be open for subscription from today and will close on Thursday, September 19.
Allotment Date: The final share allotment is going to be done on Friday, the 20th of September.
Listing Date: This stock is going to be listed on the exchanges on Tuesday, 24th of September.
The company has seen a high subscription rate for the Arkade Developers IPO, which indicates considerable interest in the company among investors in the retail, non-institutional, and institutional segments. It has a near debt-free status along with a strong track record of project delivery and expansions into new areas of Mumbai that contributed well to its positive reception in the market.

With a reasonable valuation and growth in the booming Mumbai real estate sector, there was optimism about the company’s prospects by experts. The Grey market premium further reflects a healthy demand with expectations of a successful listing.

Bottom Line: Overall, the Arkade Developers IPO is an attractive opportunity for investment that gives investors a ready window to the Mumbai real estate market and the company seems poised for future growth.

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