Arkade Developers IPO Garners Strong Market Interest with 62% Grey Market Premium

New Delhi: The shares of Arkade Developers have initiated a positive reaction in the grey market as they open their initial public offering (IPO) for subscription. On the first day of the IPO, shares were trading at a premium of Rs 80, representing a 62.5% increase over the upper price band of Rs 128, which indicates strong market interest in the company.

The company is aiming to raise Rs 410.00 crores through a fresh issue of 32,031,250 equity shares. Prior to the IPO opening, Arkade Developers successfully secured Rs 122.40 crore from anchor investors during the bidding, which concluded on September 13, 2024.

The IPO price band is set at Rs 121-128, and each allotment consists of 110 shares. Consequently, retail investors must invest a minimum of Rs 14,080 to participate. The funds raised will be allocated as follows: Rs 250 crore towards development expenses, Rs 143.5 crore for acquiring new land, while the remaining will be used for general corporate purposes.

Bigshare Services is managing the registration process for the IPO, with Unistone Capital serving as the book-running lead manager. The subscription period spans three days, concluding on September 19, 2024. The allotment will be finalized by September 20, 2024, and shares are expected to be deposited into demat accounts by September 23, 2024. Arkade Developers’ shares will likely commence trading on the BSE and NSE on September 24, 2024.

In terms of investment recommendations, Deven Choksey Research advises investors to subscribe to the IPO. They noted Arkade Developers’ strong financial performance, with a 66% compound annual growth rate (CAGR) in revenue from FY22 to FY24, supported by corresponding rises in EBITDA and PAT of 75% and 55%. This reflects the company’s operational efficiency, with return on equity (ROE) and return on capital employed (ROCE) standing at a substantial 47%.

Similarly, Choice has given a ‘Subscribe’ rating, emphasizing the competitive EV/Sales ratio of 3.2x at the upper price range and the company’s growth strategy. Arkade Developers, known for focusing on Mumbai’s western suburbs, has started expanding into the eastern suburbs, enhancing its growth potential. The firm’s near debt-free status and timely project execution further solidify its growth prospects.

Arkade Developers is a real estate company that specializes in developing premium residential lifestyle projects in Mumbai. The company operates on an asset-light model through joint ventures, emphasizing high-quality residential solutions in the mid-premium segment.