The year 2022 has been a dream year for real estate developers as they are calling it the start of a strong real estate bull cycle. Keystone Developers popularly known as Rustomjee Developers was recently listed on the bourses on 24th November with a premium of 3 percent to the issue price of Rs 541.
It is a Mumbai-based real estate player with 32 completed projects as of 30th June, 12 ongoing projects and 21 forthcoming projects. The company has strategic investors like HDFC Capital Affordable Real Estate Fund-3 and Lipalton Pte. ltd in its businesses and in the past it has had investors like Giza and HDFC Capital Affordable Real Estate Fund 1.
Talking about this real estate boom, Boman Rustom Irani, CMD of Keystone Realtors said, “There are lots of reasons why the real estate has actually taken off the way it has. The key is that in India, we are largely building our wealth to actual real estate sources, and most of the families have about 60 percent of their wealth growth coming from the real estate itself.”
He added that buyers are looking at long-term safety for their money. He added cities like Mumbai and MMR have grown hugely and redevelopment has been the big growth trigger.
Irani said, “This has led to a newness or a kind of youth infusion into the city of Mumbai redevelopments add to that the infrastructure is being built across the country this is leading to a lot of commercial development as well.”
Last known number at Rs 244 crore which is in three months FY23, but from FY20 bookings of Rs 1,000 crore, bookings are now at Rs 2,640 crore, so that is the normalized run rate. Volumes in Fy22 were at 1.48 million square feet, and in 3 months it is at 0.2 million square feet, during the pandemic it was between 0.7-0.9 million square feet.
Debt was a big issue for the company and now that has been able to reduce it substantially, from 7.7x in 2020 to 1.38x in FY22 and funds raised via IPO were also used to reduce debt.
Irani said, “We did not need to come to the capital markets, because the fact that the debt was high, our debt wasn't very high. As a matter of fact, in 2018, we started reducing, we started on this path of reducing our debt. We brought it down to absolutely manageable levels where all the debt lay in the projects themselves, ongoing projects. But we have decided to bring that down as well right now. So that there's headroom for growth, again. 1:1 debt to equity is something that real estate developers can happily survive or take care of a healthy company.”
For full interview, watch accompanying video