Signatureglobal India IPO Review: Signatureglobal India is coming up with the IPO which is set to be listed on the NSE and BSE. The IPO will be open for subscription on 20th September 2023, closing on 22nd September 2023. In this article, we’ll dive into the strengths and weaknesses of Signatureglobal India IPO review and give you a comprehensive review of their IPO. Keep reading to learn more!
Table of Contents
Signatureglobal India IPO Review – About The Company
The company strategically focuses on the Affordable Housing (AH) segment (below ₹ 4 million price category) and the Middle Income Housing (MH) segment (between ₹ 4 million to ₹ 2.5 million private category). Most of their completed, ongoing, and forthcoming projects are located in Gurugram and Sohna in Haryana, with 88.49% of their saleable area located in this region as of March 31, 2023.
Almost all of their projects have been undertaken under the Affordable Housing Policy (AHP) or the Deen Dayal Jan Awas Yojana – Affordable Plotted Housing Policy (DDJAY – APHP).
AHP (Revenue-56.2%) – Their AHP projects, typically priced below ₹ 3.00 million per unit, include amenities such as recreational areas, gardens, open spaces, and community halls.
DDJAY – APHP (Revenue-43.8%)- These projects typically priced between ₹ 4.00 million and ₹ 12.00 million per unit, provide facilities including gymnasiums, recreational spaces, entertainment centers, swimming pools, and sporting facilities.
As of 2023, the company has 1.37 million square feet in ongoing projects, comprising 11,427 residential units and 932 commercial units, and 19 forthcoming projects.
Signature Global has an extensive distribution network focused on their target customer segments, with 593 channel partners and an in-house team of 41 employees engaged in direct sales and 100 employees.
PROJECTS: Their completed projects include Synera, Serenas and Sunrise, each located in Gurugram, Sohna and Karnal respectively in Haryana. Notable ongoing projects include City 37D and Prime, both located in Gurugram, Haryana.
Signatureglobal India IPO Review – Industry Overview
The real estate sector is a key contributor to India’s economy, which is projected to reach a market size of $1 trillion by 2030 and contribute 13% to the GDP by 2025. Housing sales have increased by 48% YoY to ₹ 3.47 lakh crore in the last fiscal year due to larger volumes and better price realization.
Government initiatives have led to significant changes in the housing sector, primarily catered to by the private sector. These include the implementation of the Real Estate Regulator Act (RERA) and the Goods and Service Tax (GST). Developers have been given an additional year to repay lenders, aiding in cash flow management and reducing asset classification stress of Real Estate focused NBFCs.
Affordable housing has become a crucial part of the national agenda, particularly in urban areas. The NCR witnessed a 73% increase in housing sales from 2020 to 2021. Despite limited supply in 2022, the trend of absorption continued with a 59% rise in unit sales. Gurugram accounted for a 75% share of the 31,706 units launched in NCR in 2022.
The Government of Haryana has introduced two policies: The Affordable Housing Policy for high-rise group-housing and the Deen Dayal Jan Awas Yojna – Affordable Plotted Housing Policy for plots and low-rise independent floors. These policies aim to encourage planning and completion of group housing projects and development of high-density plotted colonies in Haryana.
Signatureglobal India IPO Review – Financials
As we look at the financials of Sigantureglobal we find out that revenue from operations have increased significantly in recent years, from ₹82 crore in March 2021 to ₹1553 crore in March 2023, and its sales grew from ₹1690 crore to ₹3430 crore in the same period.
However, the company’s net debt has also increased significantly, from ₹557 crore in March 2021 to ₹1093 crore in March 2023. It has also incurred net losses in the past few years, although the losses have decreased from ₹86.2 crore in March 2021 to ₹-63.7 crore in March 2023. The EPS is also negative, at ₹-5.44.
Financial Metrics
(Source: RHP of the company)
Competitors of Signatureglobal India
Key competitors include established real estate developers such as DLF, Sobha, Macrotech Developers, and Prestige in the markets where the company operates. Signature Global also encounters competition from numerous smaller, unorganized operators in the residential segment.
Strengths of the company :
- The company is recognized as the premier developer of affordable and mid-range real estate in Delhi NCR, with a wealth of experience in managing projects in these categories. It is a well known brand and has an extensive distribution network, and powerful digital marketing skills, all of which contribute to swift sales. Indeed, a significant portion of the company’s sales in the Gurugram and Sohna area, as well as under the AHP, are made directly
- It possesses a well-established brand, robust distribution network, and digital marketing prowess, leading to accelerated sales. A notable 45.85% of sales in Gurugram and Sohna and 55.69% under the AHP are direct.
- The company is an active member of the IGBC and is committed to environmental sustainability, implementing green building concepts in projects to reduce carbon impact and increase green cover.
- The company has implemented uniform business procedures that allow it to provide top-notch housing solutions to its clients. In the majority of its projects, it utilizes aluminium formwork technology, which not only accelerates the construction process but also guarantees the production of robust and superior quality structures.
Weaknesses of the company:
- Signature Global’s business and profitability are significantly dependent on the performance of the real estate market in the Delhi NCR region, particularly in Gurugram and Sohna micro-markets in Haryana. The majority of its revenue is generated from these locations, and fluctuations in market conditions may affect its ability to sell projects at expected prices, adversely affecting revenues and earnings.
- The company’s business and financial performance is dependent on policies such as the Affordable Housing Policy. Any withdrawal of such policies by the Haryana government could certainly affect the company’s revenue and operations.
- Signature Global is engaged in the development of residential real estate projects for customers in the affordable and mid housing segment, predominantly in Gurugram and Sohna micro-markets. Its success is dependent on its ability to anticipate and respond to consumer requirements.
- An increase in land prices or shortages of land available for development could have a material adverse effect on the company’s operations. The availability of developable land, particularly in Delhi NCR and Haryana, is limited, making the acquisition of new land highly competitive and costly.
- The company has unsold units among its ongoing and completed projects. As of now, 16.85% of its commercial completed project units remain unsold. The risk of owning unsold inventories can be substantial, and their market value can fluctuate significantly due to changing economic and market conditions. If Signature Global is unable to sell its current unsold inventory, its business, results of operation, and financial condition may be adversely affected.
Signatureglobal India IPO Review – GMP
The IPO for Signatureglobal India is set at a price band of ₹366-₹385. The latest grey market price stands at ₹23. The IPO is projected to list at a premium of 5.97%, with an estimated listing price of ₹408.
Signatureglobal India IPO Review – Key IPO Information
| Particulars | Details |
|---|---|
| IPO Size | 730Cr |
| Fresh Issue | 603Cr |
| offer for sale | 127Cr |
| Opening date | 20th September , 2023 |
| Closing date | 22nd September , 2023 |
| Face Value | ₹1 per share |
| Lot Size | 38 shares |
| Minimum Lots | 1 (38 shares) |
| Maximum Lots | 13 (494 Shares) |
| Investment Amount | ₹14,630 |
| Listing Date |
Promoters: Pradeep Kumar Aggarwal, Lalit Kumar Aggarwal, Ravi Aggarwal, Devender Aggarwal, Pradeep Kumar Aggarwal HUF, Lalit Kumar Aggarwal HUF, Ravi Aggarwal HUF, Devender Aggarwal HUF and Sarvpriya Securities Private Limited are the promoters of the Company.
Book Running Lead Manager: ICIC Securities ltd, Axis capital ltd, Lotak Mahindra capital company ltd
Registrar to the Offer: Link Intime India private ltd
The Objective of the Issue:
The Company proposes to utilize the Net Proceeds towards the funding of the following objects:
- Re-payment or pre-payment, in full or in part, of certain borrowings availed by the Company
- Infusion of funds in certain of our Subsidiaries, namely Signatureglobal Homes, Signature Infrabuild, Signatureglobal Developers, and Sternal Buildcon for re-payment or pre-payment, in full or in part, of certain borrowings availed by the Subsidiaries;
- Inorganic growth through land acquisition and general corporate purposes.
In Closing
Signatureglobal India focus is on affordable and lower mid-segment housing. The company has demonstrated its ability to scale up rapidly. However, it has incurred losses and its revenue is dependent on one region, which could be a risk factor.
Nevertheless, the company has generated good revenue and plans to generate profits in the coming years, which demonstrates its strong execution capabilities and ability to achieve faster.
what’s your take on the Company’s future? Are you going to apply for the IPO? Share your thoughts with us in comment below!
Written by Niharika Jadhav
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