North India concentrated real estate player Omaxe is coming out with its IPO which is open from July 17 to July 20. The price band of issue is Rs. 265-310 per share and constitutes 11.2% of the paid-up capital.
The issue seeks to raise Rs.550 crores much lower than the earlier target of Rs.1300 crore. The reasons attributed to this are the hardening interest rates and softening property prices. Also SEBI has issued new guidelines regarding land valuation leading to tighter disclosure norms.
Omaxe has a land bank of 3,252 acres and have 47 projects under development in 30 cities across 9 states. 75% of the revenue comes from the NCR region. Omaxe is involved in residential and commercial real estate development projects ranging from integrated townships, group housing, retail, hotels, IT, bio-tech parks and SEZs.
Trammel Crow Meghraj has valued Omaxe’s land holding at Rs.13,600 crore while post IPO, at upper end of offer price the market capitalisation of the company will be around Rs.5,425 crore.
The company plans to use the proceeds of the IPO by repaying Rs.200 crore loan to LIC Mutual Fund, Rs.325 crore for acquisition of land and Rs.150 crore for financing projects in north India. Omaxe has also received nod to set up an SEZ in Rajasthan.
Considering successful IPO of DLF and HDIL, and interest rates having peaked, India’s real estate development may further gather steam and grow to an estimated $90 billion by 2015. Given Omaxe’s concentrated projects and reasonable priced IPO, investors may be well advised to invest to get listing gains.
Find this article at: http://www.labnol.org/india/corporate/omaxe-ipo-reasonable-valuations/851/
web: http://www.labnol.org/ email: amit@labnol.org
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