Arkade Developers Limited Company is coming up with an IPO size of Rs. 410 crore. The entire amount will be a fresh issue. The IPO will open on 16th September 2024 and close on 19th September 2024. It will be listed on the exchange on 24th September 2024. In this article, we will look at the Arkade Developers IPO 2024 and analyze its strengths and weaknesses. Let’s begin.

Arkade Developers IPO 2024 -About the Company

Arkade Developers Limited was established in 1986, and its headquarters are in Mumbai, Maharashtra. It is one of the prominent real estate development companies in India. Arkade Developers Limited’s primary focus is on developing new projects and redeveloping residential projects across the Mumbai Metropolitan Region (MMR).

The company has developed a total of more than 5 million square feet of property and more than 2.5 million square feet under development. It has delivered 29 projects, 5 ongoing projects, and 2 upcoming projects. 

Arkade Developers Limited has launched 1,040 residential units and sold 792 residential units in different markets in the MMR. The company specializes in residential and commercial projects, focusing on creating high-quality living and working spaces.

The company also operates by acquiring land, designing projects, and overseeing construction. With over 35 years of industry experience, Arkade Developers has established itself as a trusted name in Mumbai’s real estate sector. 

The company portfolio includes residential developments like Arkade Crown in Borivali and Arkade Aspire in Goregaon. Its projects stand out for modern designs, sustainable practices, and compliance with regulatory norms, including RERA compliance.

The company invests in modern technology and sustainable practices to minimize environmental impact. Arkade Developers Limited’s expertise in project execution is reflected in its timely delivery, quality construction, and high customer satisfaction.

Arkade Developers IPO 2024 – Industry Overview

The real estate industry in India is witnessing significant growth, driven by urbanization and rising disposable incomes. It is among the most well-known industries worldwide. The real estate sector is projected to reach a market size of US $1 trillion by 2030, up from US $200 billion in 2021 and contributing 13% to the nation’s GDP by 2025. It is also expected to reach US $5.8 trillion by 2047, which is contributing to 15.5% of the Indian GDP.

Real estate market growth is fueled by government initiatives such as the Smart Cities Mission and affordable housing schemes, which aim to improve infrastructure and increase housing availability. The demand for residential and commercial properties continues to rise, particularly in metropolitan areas. As of 2024, the demand for residential properties remains strong, particularly in the Mumbai Metropolitan Region (MMR), which accounts for 29% to 33% of residential sales among India’s top cities.

Arkade Developers IPO 2024 – Financial Highlights

Coming into the financial analysis of Arkade Developers Limited, the company’s revenue has slightly decreased from ₹228.93 crores in FY22 to ₹220.15 crores in FY23. In FY24, it has increased by 188.32% to ₹634.74 crores as compared to the previous year. The company’s revenue growth has had a compound annual growth rate (CAGR) of 80.49% for the last three years.

Arkade Developers Limited’s net profit has slightly decreased from ₹50.84 crore in FY22 to ₹50.77 crore in FY23. The company has improved its net profit in FY24 and reached ₹122.81 crore, which has grown by 141.89%. The net profit has grown at a CAGR of 77.48% over the last three years. Arkade Developers Limited’s EBITDA margin has decreased from 31.04% in FY23 to 26.68% in FY23. The net profit margin has also dropped from 23.06% in FY23 to 19.35% in FY24.

In FY24, Arkade Developers Limited’s ROE massively improved from 46.90% to 29.02%. The adjustable ROCE of the company also increased from 24.30% in FY23 to 47.34% in FY24. Further, Arkade Developers Limited has reduced its net browning from ₹149 crore in FY23 to ₹69.41 crore in FY24. It is reflected in the debt-to-equity ratio, which dropped from 0.74x in FY23 to 0.21x in FY24.

Peers of the Company

Arkade Developers Limited’s peer competitors are Keystone Realtors Limited, Godrej Properties Limited, Macrotech Developers Limited, and Suraj Estate Developers Limited. Arkade Developers Limited has less revenue compared to the other peer competitors listed in the stock market, but more than Suraj Estate Developers Limited.

The below images show the comparison of peer competitors of Arkade Developers Limited:

Strengths of the Company

• Strategic location in MMR: Arkade Developers operates in one of India’s most lucrative real estate markets, contributing to the majority of residential unit sales in Mumbai. Its presence in high-demand micro-markets like Andheri, Borivali, Goregaon, and Santacruz further enhances its competitive position.
• Proven track record of project completion: Arkade has successfully completed multiple projects on or before time, a key strength in the real estate industry. This timeliness boosts its credibility and reputation, especially in light of regulatory changes like RERA, which enforce strict compliance with project deadlines.
• Integrated business model: The company follows an integrated approach with in-house resources for legal, business development, sales, and marketing. This reduces dependency on external vendors and ensures better control over project execution.
• Customer-centric approach: The company’s focus on building strong customer relationships through personalized service and after-sales support has helped it grow its brand organically through customer referrals.
• Blended Development Strategy: Arkade focuses on both new developments and redevelopment projects. This gives the company flexibility to work on capital-efficient redevelopment projects while also expanding its footprint through new developments.
• Financial Growth: The company has demonstrated strong financial growth and revenues increasing significantly between FY 2022 and FY 2024, indicating robust demand and effective project execution.

Weaknesses of the Company

• Dependence on Key Management Arkade’s operations and strategic decisions are closely tied to its promoters and key executives. Any disruption in leadership could adversely affect the company’s performance.
• Challenges in Redevelopment Projects: Redevelopment projects can face delays due to tenant resistance and lengthy negotiations, leading to increased timelines and expenses, making them less efficient than initially anticipated.
• Third-party contractor dependency: Arkade has an integrated business model. It remains dependent on third-party contractors for construction. Any issues or delays with contractors can impact project completion.
• Regulatory and Compliance Risks: The real estate sector is heavily regulated, and any changes in policies, such as those related to RERA compliance, could increase project costs or delay approvals.
• Limited Market Reach Beyond MMR: Arkade Developers may face growth challenges compared to rivals with a wider geographic footprint. Its limited presence outside MMR could constrain future expansion opportunities.

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Arkade Developers IPO 2024 – Key IPO Information

The shares of Arkade Developers Limited’s price in the grey market were trading at a 37.50% premium as of September 11th, 2024. The shares in Grey Market traded at Rs. 176. This gives it a premium of Rs. 48 per share over the cap price of Rs. 128.

Promoter: Amit Mangilal Jain

Book Running Lead Manager: Unistone Capital Private Limited

Registrar to the Offer: Bigshare Services Private Limited

The Objective Of The Issue:

• Funding for the development of ongoing projects and upcoming projects – 250 crore
• Funding for the acquisition of land for real estate projects and general corporate purposes

Conclusion

In conclusion, Arkade Developers Limited shows promise in the growing Indian real estate market. The company has a strong track record and strategic focus on Mumbai. Its financial growth and customer-centric approach are noteworthy strengths. However, it faces challenges like regulatory risks and limited market reach.

Investors should consider the company’s potential against industry risks. The IPO’s success may depend on market conditions and investor desire for real estate stocks. Overall, Arkade presents an interesting opportunity for those looking to invest in the property sector.

So what do you think of this company? Can the company be able to increase its market presence and maintain growth based on its competition with peers? What is your view? Let us know in the comments below.

Written By Nikhil Naik

By utilizing the stock screener, stock heatmap, portfolio backtesting, and stock compare tool on the Trade Brains portal, investors gain access to comprehensive tools that enable them to identify the best stocks, also get updated with stock market news, and make well-informed investments.

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