Signatureglobal India – IPO Alert

 

 

With a population of more than 46 million and spread over 53,000 square kms, Delhi NCR has witnessed urbanization levels of around 62%. This urban area is also the country’s largest planned region. There are growing need about the provision of adequate and up-to-date urban infrastructure and basic amenities, with NCR’s urbanization rate being almost double of the national level. Various national initiatives such as PMAY, Housing for All by 2022, AMRUT, Smart Cities Mission and Infrastructure status to Affordable Housing have been taken to address the pressing urban housing shortage.  Regional authorities such as Delhi Development Authority (DDA), Haryana Urban Development Authority (“HUDA”) and Ghaziabad Development Authority (GDA) are also actively participating to ensure that affordable housing is provided to the target segment of the population. Due to the vast region under coverage, there are numerous pockets in the entire NCR where affordable houses (priced less than INR 4 million) are built. These include a mix of established and upcoming locations and offer significant options to the affordable housing home buyers. While there are many locations in the NCR that can be identified as affordable housing destinations, Gurugram- Sohna region collectively accounted for 98% for 2022 and 84% for the first quarter of 2023 of the affordable units supply in NCR. Given the trends from previous years we foresee that the affordable housing segment will have continued traction in the market with respect to supply due to sustainable demand. Over the past years from 2017 to first quarter of 2023, the average share of affordable housing (Gurugram and Sohna) in total supply of residential units is close to 36%. Going forward, new affordable developments are likely to be observed on the outskirts due to increasing land and construction cost. This provides a growth opportunity for Signatureglobal Ltd.

Signatureglobal Ltd. is the largest real estate development company in the National Capital Region of Delhi (DelhiNCR) in the affordable and lower mid-segment housing in terms of units supplied (below INR 8 million price category) between 2020 and the three months ended March 31, 2023, with a market share of 19%. The company commenced operations in 2014 through its subsidiary, Signature Builders Private Limited, with the launch of its Solera project on 6.13 acres of land in Gurugram, Haryana. Signature has grown its operations over the years and in less than a decade, and as of March 31, 2023, the company sold 27,965 residential and commercial units, all within the Delhi NCR region, with an aggregate saleable area of 18.90 million square ft. As of March 31, 2023, Signature sold 25,089 residential units with an average selling price of INR 3.60 million per unit. Signature has strategically focused on the Affordable Housing (AH) segment (below INR 4 million price category) and the Middle Income Housing (MH) segment (between INR 4 million to INR 2.5 million private category) through GoI and state government policies. As of March 31, 2023, Signature completed an aggregate developable area of 7.64 million square feet in its completed projects and an additional 1.37million square feet in its ongoing projects, comprising 11,427residential units and 932commercial units, for which the company has received occupation certificates.

The company reported revenues of INR 15,535.70 million which represented a CAGR of 335.12% between FY21-FY23. The company’s sales in terms of area was 4.35 million units which represented a CAGR of 1.17% in FY23. Signatureglobal reported adjusted EBITDA of INR 2155.64 million in FY23 compared with INR 273.82 million and INR (582.85 million) in FY22 and FY21 respectively. The company’s net debt increased at a CAGR of 40.10% to INR 10,938.92 million in FY23. The company’s loss has been decreasing rapidly as the company’s diluted loss dropped to INR 4.92 from INR 10.23 in FY22 and INR 7.56 in FY21.

Objects of the issue:
1.  Repayment of borrowings
2. Infusion of funds in subsidiaries
3. Inorganic growth initiatives