PRICING MARS PREMIUM PROJECT
MAX. ISSUE SIZE (Rs) : 1127 crore
PRICE BAND (Rs) : 500 -- 525
ISSUE OPENS/CLOSES : 31stJuly to 3rdAugust, 2007
LISTING : NSE, BSE.
This company is a prominent player in the residential real estate segment in Southern India, and it now proposes to tap the commercial segment too.
Puravankara’s properties are spread across the southern cities and towns of Chennai, Kochi, Hyderabad, Mysore and Coimbatore, besides its holding of 1.38 million sq ft land in Colombo. Notably though, close to three-fourth (73 per cent) of its land holding is concentrated in Bangalore.
This company also has a joint venture agreement a Singapore-based company, Keppel Investment, which should enhance its execution capabilities. Rs.1,127 crore are proposed to be raised through the IPO route primarily to fund land acquisition and repay debts.
Puravankara’s USP is the clarity of ownership in its land-bank. 14 million square feet of the developable area of 116 million square feet already has ongoing projects in them. Similarly, 65 per cent of the total land-bank is owned by the company itself, whereas only 6 per cent of the land is on sole development rights where the title lies with the owner, thereby giving the company only development rights.
On the flip side, the first and larger of the two major concerns revolve around the company’s geographical concentration in southern India, and more particularly in Bangalore. The other concern revolves around the company’s over-leveraged status with its debt-equity ratio approximating 3. This concern however, will be addressed as part-extinguishment of debts is part of the IPO objectives.
The financials appear satisfactory, with the company’s topline reflecting a CAGR of over 50 per cent over the past four years. Its operating margins which have been in excess of 30 per cent during the same time frame too reflect good performance.
So far, so good. However, where the company seems to have erred is on the pricing front. With companies like Sobha Developers which arguably has a broader business model and IVR Prime with the backing of a strong parent as competitors, it seems that this company would have been better served by a more modest price demand. At the offer price level, investors would need to bet more on the real estate boom at the bourses picking steam than on the company’s fundamentals in the near term.
MAX. ISSUE SIZE (Rs) : 1127 crore
PRICE BAND (Rs) : 500 -- 525
ISSUE OPENS/CLOSES : 31stJuly to 3rdAugust, 2007
LISTING : NSE, BSE.
This company is a prominent player in the residential real estate segment in Southern India, and it now proposes to tap the commercial segment too.
Puravankara’s properties are spread across the southern cities and towns of Chennai, Kochi, Hyderabad, Mysore and Coimbatore, besides its holding of 1.38 million sq ft land in Colombo. Notably though, close to three-fourth (73 per cent) of its land holding is concentrated in Bangalore.
This company also has a joint venture agreement a Singapore-based company, Keppel Investment, which should enhance its execution capabilities. Rs.1,127 crore are proposed to be raised through the IPO route primarily to fund land acquisition and repay debts.
Puravankara’s USP is the clarity of ownership in its land-bank. 14 million square feet of the developable area of 116 million square feet already has ongoing projects in them. Similarly, 65 per cent of the total land-bank is owned by the company itself, whereas only 6 per cent of the land is on sole development rights where the title lies with the owner, thereby giving the company only development rights.
On the flip side, the first and larger of the two major concerns revolve around the company’s geographical concentration in southern India, and more particularly in Bangalore. The other concern revolves around the company’s over-leveraged status with its debt-equity ratio approximating 3. This concern however, will be addressed as part-extinguishment of debts is part of the IPO objectives.
The financials appear satisfactory, with the company’s topline reflecting a CAGR of over 50 per cent over the past four years. Its operating margins which have been in excess of 30 per cent during the same time frame too reflect good performance.
So far, so good. However, where the company seems to have erred is on the pricing front. With companies like Sobha Developers which arguably has a broader business model and IVR Prime with the backing of a strong parent as competitors, it seems that this company would have been better served by a more modest price demand. At the offer price level, investors would need to bet more on the real estate boom at the bourses picking steam than on the company’s fundamentals in the near term.
