Shares of Macrotech Developers (erstwhile Lodha Developers) traded at a mere 4-5 percent premium over the issue price in the grey market ahead of its initial public offering (IPO).
The company’s shares traded at a premium of Rs 20-25 at Rs 506-511 in the grey market as against the higher end of the price band of Rs 486 per share, as per data on IPO Watch.
The IPO of realty major Macrotech Developers will open for subscription on April 7 and close on April 9.
The price band for the offer has been determined at Rs 483–Rs 486 per equity share. The company aims to raise Rs 2,500 crore through its public offer.
Lodha Group's Macrotech Developers to launch IPO on April 7; check issue size, price band, other key details
This is the company's third attempt to launch an IPO after it failed to raise Rs 2,800 crore in September 2009 due to global recession and then later in 2018 because of adverse market conditions.
The company proposes to utilise the net proceeds from the fresh issue towards reduction of aggregate outstanding borrowings of the company amounting up to Rs 1,500 crore, acquisition of land or land developmental rights aggregating up to Rs 375 crore and for general corporate purposes.
The company's consolidated outstanding borrowings as of December 2020 stood at Rs 18,662.19 crore.
Macrotech Developers is amongst the largest real estate developers in India by residential sales value for fiscal 2014 to 2020.
As of December 31, 2020, it has completed approximately 77.2 million square feet of developable area across 91 projects. It has 54 ongoing and planned projects having approximately 73.8 million square feet of developable area.
The company is known for its luxury projects such as Trump Towers in Mumbai and Grosvenor Square in London.
“The company has a strong brand in affordable and mid-income housing projects but is not able to deliver the growth in sales and free cash flow in the last couple of years. The company has reported sales degrowth of 68 percent in 9MFY21 and reported a negative profit after tax of Rs 265 crore. Given weak revenue growth in the past and leveraged balance sheet we assign a “Neutral” rating to the IPO,” said Angel Broking.