Arkade Developers Limited IPO: Check IPO Date, Lot Size, Price & Details

Introduction to Arkade Developers IPO:

Arkade Developers is a real estate development Company concentrating on the development of premium aspirational lifestyle residential premises in Mumbai, Maharashtra. The company business can broadly be classified into two categories: (i) development / construction of residential premises on land acquired by our Company (New Projects) and (ii) redevelopment of existing premises (Redevelopment Projects).

In the last 2 decades, the company has completed 28 projects (including 11 projects on a stand-alone basis (including 2 projects executed through partnership firms in which the company hold the majority stake), 8 projects executed by its  Promoter through his proprietorship, M/s Arkade Creations, and 9 projects through joint development arrangements with other third parties) aggregating more than 4.5 million square feet of development and have catered to more than approximately 4,000 customers. The company is currently developing approximately 3.7 million square feet across 6 Ongoing Projects and 6 Upcoming Projects (for which we have executed development agreements and are in the process of obtaining approvals, on a standalone basis.

IPO Details:

Objectives of Issue:

• Funding a part of the costs to be incurred in the development of our Ongoing Projects
• Funding acquisition of yet-to-be identified land for real estate projects
• General Corporate Purposes.

Key Strengths:

• Adherence to Due Date- Following the introduction of the RERA Act, the company successfully completed five projects, all of which were finished well ahead of their scheduled completion dates. This adherence to deadlines reflects the company's robust processes and effective internal controls.

• Consistent Performance – The company's focus on operational and functional excellence has led to healthy financial performance with Revenue having grown at a CAGR of 66.51% between Fiscal 2021 and Fiscal 2023, EBITDA having grown at a CAGR of 55.58% between Fiscal 2021 to Fiscal 2023 and Profit After Tax at a CAGR of 55.42% between Fiscal 2021 and Fiscal 2023

Risks:

• Ability to generate higher Pre Sales – The company's capacity to sustain adequate cash flows and manage working capital relies on its ability to pre-sell projects, achieving sales before project completion. Its average pre-sale rate is 74.96%, ranging from 34.21% at Arkade Pearl to 92.24% at Arkade Prime. Failure to pre-sell as anticipated may impact revenue generation and working capital, potentially affecting our capital recovery.
• Entire Business is concentrated in MMR region- The company is a Mumbai based real estate developers and its entire revenue is generated from MMR region with no current plans to expand beyond MMR. Any disruptions in the area could severally affect its business operations
• Negative Operating Cash Flows- The company’s business operations are capital-intensive, necessitating significant investment for the development and marketing of ongoing and planned projects, as well as future land acquisitions. The company typically finance these needs through bank loans and internal accrual. Over the past three years, the company experienced negative cash flows twice, which could impact its ability to secure future capital and undertake new investments

Financial Snapshot:

Interest Coverage Ratio – Interest Coverage Ratio determines the ability of a company to fulfill its interest obligations. It is a ratio that compares company earnings (before interest and taxes) to interest expenses. Essentially, it shows how many times a company can pay its interest charges using its operating profit. A higher ICR suggests a company is in a good financial position to handle its debt, while a lower ICR could signal potential financial difficulties.

Debt to Equity Ratio - The debt-to-equity (D/E) ratio is used to evaluate a company’s financial leverage and is calculated by dividing a company’s total liabilities by its shareholder equity. It is a measure of the degree to which a company is financing its operations with debt rather than its own resources.

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