Kalpataru Limited, a Mumbai-based real estate company, is gearing up for its initial public offering (IPO) worth ₹1,590 crore. This IPO will be a bookbuilding issue, comprising entirely fresh equity shares. There will be no offer-for-sale (OFS) component. The IPO aims to help the company with debt repayment and other corporate initiatives.

Company Background

Founded in 1988, Kalpataru Limited has a long-standing presence in India’s real estate sector. It is the flagship company of the Kalpataru Group, which also includes Kalpataru Projects International Limited, Property Solutions (India) Private Limited, and Shree Shubham Logistics Limited, among others.

Kalpataru has undertaken projects in major Indian cities like Mumbai, Thane, Pune, Hyderabad, Indore, Panvel, Bengaluru, and Jodhpur. As of March 31, 2024, the company has 40 ongoing projects and has completed 70 projects.

IPO Details

IPO Size: ₹1,590.00 crore

Issue Type: 100% fresh issue

IPO Dates: Yet to be announced

Price Band: To be finalised

Listing Exchanges: NSE and BSE

Face Value: ₹10 per share

Shareholding (Pre-Issue): 13,96,50,000 shares

Shareholding (Post-Issue): 17,98,50,000 shares

Final Thoughts

The Kalpataru IPO presents a mixed opportunity for investors. On one hand, it offers a chance to invest in a well-established real estate brand with ambitious future plans. On the other, its weak financial performance, negative RoNW, and substantial debt raise caution flags.

Investors looking for long-term exposure to India's real estate sector may consider the IPO based on final price band, valuations, and subscription momentum. However, a detailed look into the DRHP, market conditions, and peer performance is advised before taking a position.

Let me know if you'd like a PDF version, a social media teaser, or a YouTube description based on this

Going forward, Kalpataru intends to scale its operations by launching new projects in high-demand locations, reducing its debt burden, and streamlining its subsidiary structures. The IPO funding will play a critical role in achieving this transformation.

Risks Involved

Investors should note the following risks before subscribing:

Consistent financial losses over three years

High debt levels and interest liabilities

Dependence on the volatile real estate market

Uncertainty regarding project approvals and clearances

Allotment and listing dates are yet to be announced, but the company has already filed its Draft Red Herring Prospectus (DRHP) with SEBI, which contains detailed information on company operations, risk factors, and IPO objectives.

Peer Comparison

Though Kalpataru is primarily a real estate developer, the DRHP indicates a likely peer group that includes companies like Lodha (Macrotech Developers), Godrej Properties, and Oberoi Realty. However, Kalpataru’s financial health and scale differ significantly, especially considering the loss-making trend over the last three years.

Kalpataru’s Market Position

Despite the loss figures, Kalpataru remains a recognised name in urban real estate, known for residential townships, commercial towers, and integrated community developments. Its projects often target the mid to premium segment, with a focus on urban Tier-I and Tier-II markets.

Growth Strategy

Financial Performance

Kalpataru’s recent financials reflect a volatile performance, with a decline in profitability and increasing debt load.

The company’s return on net worth (RoNW) stands at -9.80%, highlighting the pressure on earnings and the urgent need for financial restructuring, one of the key motives behind this IPO.

Reservation and Allotment Structure

As per SEBI regulations, the reservation breakdown is:

Qualified Institutional Buyers (QIBs): Not less than 75% of the net issue

Non-Institutional Investors (NIIs/HNIs): Not more than 15%

Retail Individual Investors (RIIs): Not more than 10%

The IPO will be managed by ICICI Securities Limited, JM Financial Limited, and Nomura Financial Advisory and Securities (India) Pvt Ltd, while the registrar will be MUFG Intime India Private Limited (Link Intime).

Promoters and Shareholding

The promoters of Kalpataru Limited are Mofatraj P. Munot and Parag M. Munot, who collectively hold 100% pre-issue equity in the company. The post-issue shareholding is expected to be reduced due to equity dilution.

Use of Proceeds

The company plans to utilise the IPO proceeds for:

Repayment or prepayment of borrowings availed by the company and its subsidiaries.

• Expected allocation: ₹1,192.50 crore

General corporate purposes, which may include business expansion, project development, and working capital needs.

Disclaimer

This article is for educational and informational purposes only and does not constitute financial advice. Investment decisions should be based on individual risk tolerance and consultation with SEBI-registered advisors. Market conditions are volatile and subject to change. Neither the author nor the platform is responsible for losses arising from use of this information

The Upcoming IPOs in this week and coming weeks are Sambhav Steel Tubes, Ellenbarrie Indutrial Gases, Kalpataru, HDB Financials, ArisInfra Solutions, Influx Healthtech, Mayasheel Ventures, Eppeltone Engineers, Patil Automation, Samay Projects Services.

The Current active IPO are Jainik Power Cables, Monolithisch India.

Start your Stock Market Journey and Apply in IPO by Opening Free Demat Account in Choice Broking FinX.

Join our Trading with CA Abhay Telegram Channel for regular Stock Market Trading and Investment Calls by CA Abhay Varn - SEBI Registered Research Analyst.