Is Arkade Developers IPO Good or Bad - Detailed Review
13 September 2024
7 min read
00:00 / 00:00
Arkade Developers is kicking off its initial public offering which will be open from September 16th, 2024, to September 19th, 2024. While considering applying for this IPO, certain questions may arise in your mind, including whether the Arkade Developers IPO is good or bad, whether it is worth investing in Arkade Developers, and so on.
In this article, we'll provide a comprehensive Arkade developers IPO review, diving into its business operations and fundamental analysis to help you make a well-informed investment decision.
Arkade Developers IPO - Company Overview
Arkade is a real estate development company that was established in Mumbai, which is the financial capital of India, and focuses on premium lifestyle residential development. Its operations can be divided into two major areas: new residential project constructions and existing premises redevelopment. Established for over two decades, the firm gained its reputation for timely project deliveries, and in particular, within the intensified competition of the real estate market in Mumbai.
The company has completed 28 projects in the last 2 decades including individual residential towers as well as larger residential complexes such as Arkade Nest, Aspire, Prime, Aura, etc. For years they have developed and sold more than 45 lakh square feet of residential area and have reputed more than 4000 customers. They also cater to the upper and upper-middle class ranging in price between Rs.0.94 Cr to Rs.6.25 Cr together with the middle class that is looking into the luxury segment.
Stated within the Mumbai Metropolitan Region (MMR), the company has its core operations in the western and eastern suburbs where they have been able to secure a firm market position having 6 ongoing projects in these prime locations. They operate through two subsidiaries Arkade Paradigm and Arkade Realty where they have majority stakes further seeking to enhance their presence in the real estate business.
The company employs a distribution of communication channels with high-end HNIs & NRIs for smooth implementation of the sales process. The firm’s in-house project development team manages the totality of the project development process starting from sourcing of the land up to the handover of the project
Arkade Developers IPO - Financial Overview
Particulars | FY 2024 | FY 2023 | FY 2022 |
Revenue from operations (Rs. Cr) | 634.73 | 220.15 | 228.93 |
EBIT (Rs. Cr) | 168.23 | 68.05 | 69.90 |
EBIT (%) | 26.51% | 30.91% | 30.53% |
Profit After Tax (Rs. Cr) | 122.80 | 50.76 | 50.84 |
PAT Margin (%) | 19.35% | 23.06% | 22.21% |
Debt to Equity Ratio | 0.21 | 0.74 | 0.43 |
EBITDA ( Rs. Cr) | 169.37 | 68.32 | 69.97 |
EBITDA Margin (%) | 26.68% | 31.04% | 30.56% |
Diluted EPS (Rs.) | 8.08 | 3.34 | 3.32 |
Interest Coverage Ratio | 53.8 | 53.12 | 16.15 |
ROE (%) | 46.90% | 29.22% | 40.90% |
Completed Developable Area (sq. ft.) | - | 2,60,000 | 3,20,000 |
Collection (Rs. Cr) | 570.23 | 258.403 | 170.06 |
During FY 2024, Arkade Developers reported a great year in revenues of Rs.634.73 Rs. Cr, thereby almost tripling revenues from the previous year. In the same year, Profit after tax was Rs.122.80 Rs. Cr,
During the recent financial year, the company has also shown an improvement in its debt situation. This is indicative by its debt-to-equity ratio of 0.21 which can also mean that the firm relied less on borrowing. Likewise, the interest coverage ratio of 53.8 implies the ability of the company to overcome debt obligations 53 times.
In FY24, Arcade's ROE surged to continue its great returns to the shareholders at 46.90% from the previous year which stood at 29.33% in FY23. The company has underlined great financial health and good growth and profitability
Arkade Developers IPO- Revenue Breakup
Projects | Fiscal 2024 (Rs. Cr) | Fiscal 2024 (%) | Fiscal 2023 (Rs. Cr) | Fiscal 2023 (%) | Fiscal 2022 (Rs. Cr) | Fiscal 2022 (%) |
Redevelopment Projects | 210.39 | 33.15% | 91.32 | 41.48% | Nil | Nil |
New Projects | 424.3 | 66.85% | 128.83 | 58.52% | 228.93 | 100.00% |
In Fiscal 2022, all revenue (?228.93 crore) came from new projects, but by Fiscal 2023, redevelopment projects contributed 41.48% of revenue. In Fiscal 2024, the revenue from redevelopment increased to ?210.39 crore (33.15%), while new projects still accounted for the majority at ?424.3 crore (66.85%). This indicates growing diversification into redevelopment while maintaining strong revenue from new projects.
Arkade Developers IPO - Industry Overview
Indian real estate is among the high-growth sectors and is expected to reach a market size of $1 trillion by 2030, contributing approximately 13% to the country's GDP by 2025. There has been very good demand for mid-income, premium, and luxury residential segments in the last couple of years, especially in major urban centers such as Mumbai.
Key infrastructure developments, such as the Mumbai Trans Harbour Link and Navi Mumbai International Airport, are expected to boost real estate prices in surrounding areas.
Between 2017 and 2019, the Mumbai Metropolitan Region (MMR) saw housing supply and absorption, growing by 42% and 45%, respectively, indicating sustained demand. Recent trends indicate continued growth with a focus on sustainability and tech-enabled developments
Arkade Developers IPO - Peer Comparison:
The peer comparison of Arkade Developers Limited for FY24 is as follows:
Metric | Arkade Developers | Keystone Realtors | Godrej Properties | Microtech Developers | Suraj Estate Developers |
Revenue From operations (Rs. in Cr) | 634.73 | 2222.25 | 3035.62 | 10316.1 | 412.214 |
EBIT (Rs.. Cr) | 168.23 | 184.54 | 1152 | 2507 | 232.76 |
EBIT (%) | 26.51% | 8.30% | 37.95% | 24.31% | 56.47% |
Profit After Tax (Rs. in Rs. Cr) | 122.80 | 111.03 | 747.06 | 1554.2 | 67.49 |
PAT Margin (%) | 19.35% | 5.00% | 24.61% | 15.07% | 16.37% |
Debt Equity Ratio | 0.21 | 0.6 | 1.07 | 0.44 | 0.82 |
EBITDA (Rs. in Rs. Cr) | 169.37 | 191.85 | 1196.66 | 2711 | 236.42 |
EBITDA Margin (%) | 26.68% | 8.63% | 39.42% | 26.28% | 57.35% |
Basic EPS (Rs.) | 8.08 | 8.85 | 26.09 | 16.03 | 19.99 |
Interest Coverage Ratio | 53.8 | 4.6 | 7.57 | 5.23 | 1.68 |
ROE (%) | 46.90% | 6.40% | 7.76% | 10.32% | 22.97% |
ROCE (%) | 47.34% | 7.00% | 8.86% | 12.67% | 30.31% |
Total Revenue (Rs. in Rs. Cr) | 635.71 | 2275.63 | 4334.22 | 10469 | 415.74 |
Current Ratio | 2.45 | 1.5 | 1.43 | 1.62 | 2.36 |
Net Capital Turnover Ratio | 2 | 1.34 | 0.31 | 0.6 | 0.56 |
NAV | 21.28 | 157.81 | 359.4 | 180.8 | 148.8 |
From the above table, Though Arkade Developers may not be the largest player in terms of revenue compared to other companies like Microtech Developers or Godrej Properties, it has stood out in returns and efficiency. At the highest ROE of 46.90% and ROCE of 47.34%, Arkade does well in turning its resources into profits for shareholders.
Furthermore, The company’s debt-to-equity stood at 0.21, the smallest among peers indicating that it is operating mainly through its funds. Additionally, the interest coverage ratio of 53.80 is far better compared to its peers, it reflects the company’s capacity to repay its outstanding debt.
Arkade Developers IPO Details
Arkade Developers IPO Date
The IPO of Arkade Developers is open to subscription from September 16, 2024, to September 19, 2024. The shares will be allocated to investors on September 20, 2024, and the company will be listed in the NSE and BSE on September 24, 2024
Arkade Developers IPO Issue Price
Arkade Developers is offering its shares in the price band of Rs. 121 to Rs.128 per share. This means you would require an investment of approximately Rs. 14,080 per lot (110 shares) if you are bidding for the IPO at the upper price band.
Arkade Developers IPO Size
The company is offering a total of 32,031,250 shares, amounting to an aggregate of Rs 410 Cr. The company is issuing whole shares for fresh issue and there is no offer for sale.
Arkade Developers IPO GMP
Many investors look at the Grey Market Premium (GMP) before applying for the Arkade Developers IPO. The GMP gives an idea of market sentiment and can hint at the possible listing price, helping investors make more informed decisions
Arkade Developers IPO Application Link
Open a free Demat account with Rupeezy today and enjoy a seamless experience when applying for the Arkade Developers IPO. With an easy-to-use platform, Rupeezy makes the IPO application process quick and hassle-free. Click on the apply link below to get started.
Apply for Arkade Developers IPO
Is Arkade Developers IPO a Good or Bad Investment? Final Thoughts
Arkade Developers IPO Review: On one hand, Arkade has established a reasonably good track record in the Mumbai real estate market-concentrating on premium residential projects it has posted a reasonably good financial performance. From a profitability and efficiency perspective, its high return on equity and efficiency in the use of resources make Arkade a very attractive growth candidate. However, the company is comparatively smaller in revenue than some of its competitors.
Investors would have to consider such factors and the general state of the market to make a decision. The IPO may thus be appealing to high-return-seeking investors but with risk appetites.
For those interested in investing in such IPOs, you can open demat account with Rupeezy. Our trading platform allows you to participate in various investment opportunities including initial public offerings.
