Company Overview
Suraj Estate Developers has been involved in the real estate business since 1986 and develops real estate across the residential and commercial sectors in the South-Central Mumbai region. They have a residential portfolio in the markets of Mahim, Dadar, Prabhadevi and Parel, sub-markets of the South-Central Mumbai micro-market where the company has established its presence. They are focused primarily on value luxury, luxury segments and commercial segments. The company is now venturing into residential real estate development in the Bandra sub-market. Their focus area of operation is the South-Central region in Mumbai, mainly consisting of Mahim, Matunga, Dadar, Prabhadevi and Parel, as their expertise lies in the redevelopment of tenanted properties under Regulation 33(7) of the Development Control and Promotion Regulations (DCPR) in the Mumbai region. Since most of the land parcels in the South-Central Mumbai market are like redevelopment projects, the company’s core competence lies in tenant settlement, which is a key element for unlocking value on such land parcels. The company does not provide any construction services on its own and is 100% dependent on third-party contractors for the construction services of its projects. Since incorporation, they have completed 42 projects with a developed area of more than 1,046,543 sq. ft. in the South-Central Mumbai region. In addition to the completed projects, they have 13 ongoing projects with a developable area of 2,034,434 sq. ft. and saleable carpet area of 609,928 sq. ft. and 16 upcoming projects with an estimated carpet area of 744,149 sq. ft.
Objects of the issue:
The net proceeds from the fresh issue will be used towards the following purposes:
- Repayment/Prepayment of the aggregate outstanding borrowings of the company and their subsidiaries, Accord Estates Pvt. Ltd., Iconic Property Developers Pvt. Ltd. and Skyline Realty Pvt. Ltd.;
- Acquisition of land or land development rights;
- General corporate purposes.
Investment Rationale:
Strong brand recognition along with a longstanding presence in the residential real estate market of South-Central Mumbai region
Suraj Estate Developers is one of the market leaders in combined South-Central Mumbai sub-markets and has deep knowledge of the market regulatory environment. Their longstanding presence in value luxury and luxury segment has helped them to identify opportunities in this market. Their longstanding presence in South Central Mumbai has resulted in a better understanding of emerging trends, customer preferences and significant brand recall. Their in-house redevelopment expertise and the successful delivery of 42 completed projects have helped them build customer trust over the last 36 years. The company believes that its brand reputation enables it to sell throughout the construction phase of projects and aims to sell over 80% of the saleable area of the project during the construction phase. The company also leverages brand value and focuses on selling a sizeable percentage of units within the first year from the launch of a project and prior to the receipt of the occupation certificate, which led to generating operating cash flows during the construction phase. Such sales help reduce the need for construction finance and enable them to achieve optimal returns on projects.
Diversified portfolio of product offerings across various price points
The company has a diversified portfolio of residential developments spread across price points, unit sizes and micro-markets in South-Central Mumbai, catering to various economic and demographic segments, from value luxury to luxury residences. Their ability to cater to customers’ needs across income brackets through a range of differentiated product offerings, supported by their technical and execution capabilities, has enabled them to grow their business successfully. They have developed a diversified portfolio of projects, including redevelopment and open plot projects, in the value luxury segment and luxury segment from 1 BHK flats to 4 BHK flats. The diversity in their portfolio of projects, created by their range of offerings and prices, helps them cater to different market segments and diversify their risk of dependence on a particular segment.
Valuation and Outlook:
The company has a diversified portfolio of residential developments spread across price points, unit sizes and micro-markets in South-Central Mumbai, catering to various economic and demographic segments, from value luxury to luxury residences. Their ability to cater to customers’ needs across income brackets through a range of differentiated product offerings, supported by their technical and execution capabilities, has enabled them to grow their business successfully. They have developed a diversified portfolio of projects, including redevelopment and open plot projects, in the value luxury segment and luxury segment from 1 BHK flats to 4 BHK flats. The diversity in their portfolio of projects, created by their range of offerings and prices, helps them cater to different market segments and diversify their risk of dependence on a particular segment.
