Signature global IPO day 1: The IPO of real estate company Signature Global opened for public subscription today, Wednesday. The Rs 730 crore IPO, priced at Rs 366-385 per share, will close on September 22. So far, the IPO has been subscribed for 6 percent on the first day of bidding and bids have been received for 6 percent. 34,296 shares compared to 1,12,43,196 shares offered.
The retail retail investor (RII) category saw 27 percent subscription, while the non-institutional investor category saw only 3 percent of the quota. And the qualified institutional buyers (QIBs) section has received bids for 2,622 shares as against 62,56,858 shares under quota.
The Signature Global IPO allotment will take place on September 27. The company will make its stock market debut on October 4, with a stock listing on BSE and NSE.
Signature Global IPO GMP
According to market observers, Signature Global is currently trading Rs 34 higher in the gray market. The gray market premium or GMP of Rs 34 is about 8.83 percent higher than the highest issue price of Rs 385 per share. This means that the gray market expects a stock market profit of 8.83 percent from the public issue.
The ‘gray market premium’ indicates that investors are willing to pay more than the issue price.
Signature Global IPO: Should You Subscribe?
On the IPO rating, brokerage firms including HDFC Securities, Sushil Finance, Ventura Securities and Anand Rathi have remained neutral.
“The issue is priced at a P/BV of 101.05, based on NAV of Rs 3.81. The company has posted losses in the last three fiscal years. Keeping in mind the real estate sector and its fluctuating demand style is a matter of concern. Looking at both the opportunities and challenges faced by the company and sustaining the further performance of the company, prudent investment by investors with surplus cash once the performance turns,” Sushil Finance said in a note.
Anand Rathi said in his note that Signature Global differentiates itself through its choice of micro markets and focus on affordable housing.
“Thanks to its rapid scaling of operations in the NCR, sharp focus on high-value residential properties (meeting wage bracket demand) and select commercial projects, the company has emerged as a preferred real estate supplier in its chosen micro-markets. Thanks to its strong project pipeline, continued focus on timely project execution (established reputation, internal execution capabilities) and a supportive demand environment, the company aims to further strengthen its leading position. Its gradual expansion into newer micro markets within NCR with characteristics similar to the existing focus areas will provide opportunities in the short to medium term,” the report said.
About Signature Global IPO
The proceeds from the IPO will mainly be used for debt reduction and business expansion. The public issue closes on September 22. The price range has been fixed at Rs 366-385 per share.
The total size of the IPO is up to Rs 730 crore, comprising a fresh issue of shares worth up to Rs 603 crore and an offer for sale (OFS) of up to Rs 127 crore.
Delhi-NCR-based Signature Global has already raised Rs 318.5 crore from key investors including Nomura.
In a regulatory filing late Monday, Signature Global said that under the Anchor Investors (AIs) portion of the public issue, 82,72,700 equity shares have been subscribed at Rs 385 per equity share.
The Nomura Trust and Banking Co Ltd bought a maximum of 18,70,094 shares.
Kotak Mahindra Trustee Co Ltd, Kotak India EoQ Contra Fund, Quant Mutual Fund, Nippon India Equity Opportunities AIF, Bandhan Core Equity Fund, Morgan Stanley Asia, Societe Generale, BNP Paribas Arbitrage and Goldman Sachs Singapore are some other major investors.
Signature Global – backed by HDFC Capital and IFC – had filed the draft red herring prospectus (DRHP) with capital market regulator Sebi in July last year to launch its IPO.
According to the recently filed Red Herring Prospectus (RHP), most of the proceeds will be used to reduce debt.
“Our net debt at the end of the last fiscal year was around Rs 1,100 crore. We propose to use Rs 432 crore for debt reduction,” Signature Global Chairman Pradeep Aggarwal recently told reporters.
The balance fund will be used for inorganic growth through land acquisitions and general corporate purposes.
Currently, the promoter group holds 78.35 percent stake in the company. Their shareholding will drop to approximately 69-70 percent after the listing.
International Finance Corporation partially sells its shares through OFS. IFC currently has a 5.38 percent stake in the company.
On the operational front, Signature Global achieved 32 per cent growth in its sales bookings at Rs 3,430.58 crore in the last fiscal on the back of strong residential demand.
Signature Global, which focuses on the affordable housing and middle-income segments, had clocked Rs 2,590 crore worth of sales bookings in the previous fiscal.
Signature Global’s collection from clients rose to Rs 1,920 crore last fiscal from Rs 1,282.14 crore a year ago.
It launched an area of 6.21 million square meters in 2022-23, up from 4.21 million square meters in the year-ago period.
Signature Global delivered 4.01 million square meters last financial year, compared to 3.03 million square meters in the previous financial year.
According to the RHP, the company’s total revenue rose to Rs 1,585.87 crore last fiscal from Rs 939.60 crore a year ago.
The net loss has declined to Rs 63.71 crore in 2022-2023 compared to Rs 115.5 crore in 2021-2022.
Signature Global started in 2014.
As of March 31, 2023, it has sold 27,965 residential and commercial units, all in the Delhi NCR region, with a total salable area of 18.90 million square feet.
(With inputs from PTI)
