Arkade Developers IPO: A Promising Investment Opportunity
The initial public offering (IPO) of Arkade Developers, which opened for subscription on September 16, has garnered significant attention in the market. With a target of raising ₹410 crore, the IPO witnessed a robust subscription rate, exceeding six times on its first day. This enthusiasm reflects investor confidence in the company’s growth prospects and market positioning.
Strong Start and Anchor Investor Support
Before the IPO opened, Arkade Developers successfully raised approximately ₹122.40 crore from anchor investors. The company allocated 95,62,500 equity shares at an allocation price of ₹128 per share, indicating strong institutional interest. This backing from anchor investors often serves as a positive signal for retail investors, suggesting confidence in the company’s future.
Grey Market Premium (GMP) Insights
The grey market premium (GMP) for the Arkade Developers IPO has shown a notable increase, rising from ₹70 to ₹86 before the bidding commenced. This uptick indicates a bullish sentiment among investors, suggesting they are willing to pay a premium for the shares. Based on the upper price band of ₹128 and the current GMP, the estimated listing price for Arkade Developers shares could be around ₹214, reflecting a substantial 67.19% premium over the issue price.
Subscription Status: A Positive Trend
As of 4:05 PM on the second day of subscription, the IPO had been subscribed 14.38 times overall. The retail portion saw an impressive subscription rate of 18.55 times, while the non-institutional investor (NII) segment was subscribed 23.20 times. However, the qualified institutional buyer (QIB) segment lagged, receiving bids only 0.37 times. This mixed response highlights strong retail and NII interest, which could bode well for the overall success of the IPO.
Expert Opinions: A Favorable Outlook
Market analysts are optimistic about the Arkade Developers IPO, citing favorable valuations and promising growth prospects. Sagar Shetty, a research analyst at StoxBox, emphasized the company’s rapid expansion in the Mumbai real estate market. With a remarkable revenue compound annual growth rate (CAGR) of 66.5% projected from FY22 to FY24, Arkade Developers is positioned for significant growth.
The company’s profit after tax (PAT) is expected to rise from ₹508.4 million in FY23 to ₹1,228.1 million in FY24, showcasing its effective capital utilization. Furthermore, Arkade Developers is working towards becoming debt-free, enhancing its attractiveness to investors by ensuring that funds are not diverted toward debt repayment.
Valuation and Long-Term Potential
The IPO is priced at a price-to-earnings (P/E) ratio of 15.8 times based on FY24 earnings, which is relatively lower than its peers. This valuation comfort, combined with the company’s strategic focus on redevelopment and expansion into the eastern region of the Mumbai Metropolitan Region (MMR), positions Arkade Developers as a compelling investment opportunity.
Anshul Jain, head of research at Lakshmishree Investment and Securities, echoed this sentiment, highlighting the company’s strong financial performance and strategic focus on meeting the growing housing demand in India. Despite its concentration in Mumbai, Arkade Developers’ expertise in timely project execution and navigating complex redevelopment processes are key strengths.
IPO Details and Future Prospects
The Arkade Developers IPO consists of a fresh issue of 3.2 crore shares, with a price band set between ₹121 and ₹128 per share. The subscription period runs from September 16 to September 19, with share allotment expected to be finalized on September 20. The stock is anticipated to be listed on September 24.
The net proceeds from the IPO will be utilized to fund ongoing projects, acquire land for future developments, and cover general corporate expenses. This strategic allocation of funds is expected to bolster the company’s growth trajectory and enhance shareholder value.
Conclusion
The Arkade Developers IPO presents a promising opportunity for investors looking to tap into the burgeoning real estate market in India. With strong institutional backing, positive market sentiment, and a solid growth strategy, Arkade Developers is well-positioned for long-term success. As always, potential investors are advised to conduct thorough research and consult with certified experts before making any investment decisions.