Real estate developer Signatureglobal has scaled down the size of its initial public offering of shares following good cash collections from sales and its promoters deciding not to participate in the offer for sale.

The IPO, which will be launched next week, has been reduced to ₹730 crore from ₹1,000 crore proposed in July when it had filed the draft papers. The fresh issue of shares is now ₹603 crore compared to ₹750 crore before.

Promoters not to sell

The promoters have decided not to sell any shares while International Finance Corporation will sell shares worth ₹127 crore — up from the ₹125 crore proposed earlier.

“The business in itself has created good cashflows,” Chief Executive Officer Rajat Khaturia told businessline. In FY22, cash collections from sales of its units were over ₹1,300 crore. “This gave us the confidence to reduce the primary portion (fresh issue) of the offer,” he added.

The robust sales and the spurt in demand for homes also prompted the sponsors not to offload any stake in the IPO. “It was more of a personal decision by the sponsors not to sell or participate in the OFS,” he explained.

Price band

The price band of the IPO has been fixed at ₹366-385 and the offer will be open for subscription from September 20-22.

The National Capital Region-focused developer mainly sells houses in the low and mid-income range priced up to ₹90 lakh to ₹1 crore and in the affordable segment that is priced at up to ₹30 lakh.

The company intends to maintain its focus on these segments while Gurugram will also be where it will restrict its operations, “in the foreseeable future.”

Dip in demand

In recent months, there has been a perceptible dip in demand in housing at the lower end of the price range that are sensitive to mortgage rates and house prices. As both metrics have seen a rising trend, affordability has become a bit of an issue in this segment.

Khaturia, however, said there was good demand in the NCR, specifically Gurugram, where there was a paucity of good quality developers. He also pointed out that supply of houses is nowhere near what it should have been. He added that in Gurugram, inventories were “flying off the shelves.” He attributed the drop in sales growth in the industry in general to a supply issue and not of demand.

The company ended FY23 with pre-sales of ₹3,430 crore — up from the ₹2,600 crore it sold year ago.

The company has an impressive pipeline of projects over the next 2-3 years. Projects of 17 million sq ft are ongoing while another 21 msf of projects are upcoming. This translated into a total land area of 600 acres for these projects.

The company has taken price increases in its projects but in keeping with the industry average, Khaturia said.

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