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Real estate boom: Chennai developer Casagrand to apply for IPO in December 2022

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Chennai-based real estate developer Casagrand has announced plans to go public. Since 2004, the company has built a strong residential portfolio in markets like Chennai, Bengaluru and Hyderabad.

Real estate boom: Chennai developer Casagrand to apply for IPO in December 2022
Chennai-based real estate developer, Casagrand, has announced plans to go public. The company expects to apply for an initial public offering (IPO) and secure a listing by December 2022, its managing director, Arun MN said at a press briefing on Thursday. Motilal Oswal and JM Financial Services have been appointed as bankers for the IPO process.
“We are looking at a valuation of upwards of Rs 6,000 crore, up to Rs 8,000 crore...We will begin the journey to being listed and it could take a year-and-a-half to get there,” Arun said.
He added that real estate is a capital-consuming business, and Casagrand will need huge capital to drive growth. “We want to be known as one of the big players and the market looks good for a decision of this kind,” he said.
As part of the IPO, Casagrand intends to hand 15 percent of its valuation as stock options to employees. To date, the company has received funding to the tune of Rs 1,200 crore, led by Apollo Global Management and KKR. However, all funding, Arun clarified, has been on a project-to-project basis and not on the enterprise level. “Our investors have looked to exit projects on completion,” he said.
Encouraging sales revenue in FY 21
Since Casagrand’s establishment in 2004, it has built a strong residential portfolio in markets like Chennai, Bengaluru and Hyderabad. The company reported record sales — Rs 2,300 crore — in FY 21 and is on track to hit Rs 3,750 crore in sales by the end of this fiscal.
The firm plans to invest Rs 5,000 crore in building residential real estate mainly in Chennai (Rs 3,000 crore) and Bengaluru (Rs 1,250 crore), while increasing its presence in other markets like Coimbatore and Hyderabad. “We are hoping to strengthen our presence in Bangalore and Hyderabad — both markets will contribute 35 percent to our revenues in FY 22, while Chennai will account for the rest,” said Arun.
In the year gone by, Casagrand’s average ticket price was Rs 85 lakh, with the median range of its real estate going for between Rs 40 lakh and Rs 1 crore.
The company recently forayed into building industrial parks as well. Its primary industrial park in Chennai houses Pegatron, which manufactures iPhones for the Indian market. Casagrand will now train its sights on adding 25 million square feet by 2024 with a focus on building affordable housing, priced between Rs 25 lakh and Rs 45 lakh per home.
Real estate stocks across the country have had a dream run in the last six months, with the likes of Puravankara, Lodha, Brigade, Godrej and DLF, to name a few, clocking stellar gains. In the last three days alone, the Nifty Realty index has surged by over 25 percent.
“The sentiment in the market right now is certainly one of the key reasons why we decided that it is the right time to go public,” said Arun. “Believe we have the werewithal, brand value and numbers to mobilize public money for better growth,” he added.
On Thursday, Godrej Properties gained 17 percent on the index, while Oberoi Realty, India Bulls, DLF and Sobha gained upto 15 percent. Most of the positivity comes on the back of a projected spike in registrations for September and cities like Bengaluru proposing to cut stamp duty on registration of properties.
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