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Keystone Realtors Limited
Keystone Realtors Limited: A Latest IPO Analysis
About Company
Incorporated in 1995, Keystone Realtors Limited is one of the prominent real estate developer. The company is engaged primarily in the business of real estate construction, development and other related activities in India.
As of June 30, 2022, the company had 32 Completed Projects, 12 Ongoing Projects and 21 Forthcoming Projects across the Mumbai Metropolitan Region ("MMR") that includes a comprehensive range of projects under the affordable, mid and mass, aspirational, premium and super premium categories, all under the Rustomjee brand.
June 30, 2022, Keystone Realtors have developed 20.22 million square feet of high-value and affordable residential buildings, premium gated estates, townships, corporate parks, retail spaces, schools, iconic landmarks and various other real estate projects.
As part of the business model, the company is entering into joint development agreements, redevelopment agreements with landowners or developers or societies, and slum rehabilitation projects, which requires lower upfront capital investment compared to direct acquisition of land parcel.
The company have adopted an integrated real estate development model for every stage of the property development life cycle, commencing from business development, which involves the identification of land parcels and the conceptualization of the development, to execution, comprising planning, designing and overseeing the construction activities, marketing and sales.
Industry Analysis
Key Growth Drivers of the Indian Real Estate Sector
The graph below shows the size of India’s Real Estate Market from 2008 to project levels of 2030:
Improving Education Levels and Increasing per Capita Income Growth
India has witnessed substantial improvement in education levels both, in higher education as well as school education. India’s education index, which is an indicator of school education, exhibited a growth of 46% in the last two decades. In addition, there has been a considerable improvement in the quality of higher education in India. As of June 2022, there are close to 9,000 institutes across various disciplines, including engineering, management, hotel management and applied arts, which are affiliated with All India Council for Technical Education (“AICTE”). On an average, close to a million students graduate from these institutes every year and approximately 0.7 to 0.8 million students are directly placed from these institutes every year in white-collar jobs, which create wide demand base for mid-end housing.
The following graph sets forth total number of placements (in lakhs) from AICTE affiliated institutes from Fiscal 2012-13 to Fiscal 2020-21:
Improvement in overall education level leads to better job prospects and enhancement in standard of living. With improvements in socio-economic parameters, India’s per capita gross national income (“GNI”) has also increased at a CAGR of 8% from Fiscal 2013-2014 to Fiscal 2021-2022, which in turn is expected to drive demand for real estate development.
The following graph sets forth year-on-year trend for per capita Gross National Income (GNI) in India:
Penetration of Housing and Home Ownership
As per the census figures and the Ministry of Housing and Urban Affairs, number of households have increased from 191.96 million in 2001 to 246.69 million in 2011 which shows a 28.51% increase in number of households. Out of these households, home ownership, i.e., owned houses increased from 166.35 million in 2001 to 213.53 million in 201 which shows an overall increase of 28.36%.
Overall share of households (i.e., no of houses including owned, rented or any other) in urban areas increased from 28% in 2001 to 32% in 2011 and in rural areas, reduced from 72% in 2001 to 68% in 2011 in India.
The following graph shows the penetration of housing and home ownership in the years 2001 and 2011:
The above diagram signifies that owned houses in rural areas have slightly increased from 94% in 2001 to 95% in 2011 and in urban areas, the same have improved from 67% in 2001 to 69% in 2011. This shows a trend in migrating population shifting from rural areas to urban areas and increasing housing ownership among urban population.
Increasing Urbanization and Urban Housing Shortage
Along with rising population, India’s urbanization rate is also increasing at a fast pace. As per United Nations Development Programme (“UNDP”) projections, by 2046 approximately 50% of population in India will be urban. However, rapid urbanization is expected to drive the demand for housing, offices and other real estate asset classes in the medium – long term. UNDP has projected that there will be eight cities with a population of 10 million and above by the year 2035 in India, highlighting the unmet housing demand.
The Ministry of Housing and Urban Poverty Alleviation estimated a housing shortage of 18.78 million houses during the 12th period plan with 99% in the economically weaker section (“EWS”) and lower income group (“LIG”). In order to address the housing shortage in the country, GoI has launched Pradhan Mantri Awas Yojana (“PMAY”). Aggressive persuasion by the governments have demonstrated favourable performance as can be seen from the chart below, which shows the status of scheme so far.
Keystone Business Overview
Keystone is one of the prominent real estate developers (in terms of absorption in number of units) in the micro markets that they are present in (Source: Anarock Report). The company command a market share of 28% in Khar, 23% market in Juhu, 11% in Bandra East, 14% in Virar, 3% in Thane and 5% in Bhandup in terms of absorption (in units) from 2017 to 2021 (Source: Anarock Report). As of June 30, 2022, the company had 32 Completed Projects, 12 Ongoing Projects and 21 Forthcoming Projects across the Mumbai Metropolitan Region (“MMR”) that includes a comprehensive range of projects under the affordable, mid and mass, aspirational, premium and super premium categories, all under our Rustomjee brand. As of June 30, 2022, the company have developed 20.22 million square feet of high-value and affordable residential buildings, premium gated estates, townships, corporate parks, retail spaces, schools, iconic landmarks and various other real estate projects.
Since our inception in 1995, the company have strived to create a brand focused on customer satisfaction, building communities and nurturing spaces that provide our customers a superior lifestyle. We aspire to have our customers perceive the ‘Rustomjee’ brand as a trusted provider of quality offerings and services due to our track record of delivering multiple high-end awardwinning buildings, gated communities and townships. Their experience in the MMR market have helped us develop a firm understanding and acquire the requisite skill sets to create ideal spaces for communities to flourish.
The company have a diversified suite of projects across a wide range of price points, and a presence in several micro markets. They have experience in developing lifestyle projects, high value standalone buildings, gated communities and fully integrated townships, re-developments and stalled projects. Their strategically introduce differentiated offerings and corresponding amenities based on the needs of the location and community to maximise their revenue. Over the years, they have implemented designs based on customer insights and eco-friendly construction technologies to deliver modern lifestyle solutions and a diverse range of projects. Some of our notable projects include Rustomjee Elements, a large gated community in Upper Juhu, Mumbai; Rustomjee Paramount, a signature complex in Khar, Mumbai; Rustomjee Seasons, a 3.82 acres gated community in Bandra Annexe, Mumbai; Rustomjee Crown, a 5.75 acres land parcel for high-end development at Prabhadevi, South Mumbai, consisting of three high-rise towers. Company's projects include features for entertainment for the family, such as an approximately 150,000 square feet clubhouse at our Virar Global City project, a 6.22 acres podium at their Thane project, a 11.72 acres amusement park at their Virar Global City project, Leon’s World which is an interactive play space for children and adults at our Rustomjee Urbania project. The company consider gated communities as the future of living, and strive to create “nurturing spaces” to deliver convenience, community and comfort to their customers. The company place emphasis on understanding the demographic we cater to, their needs, traditions and lifestyles.
As part of their business model, they focus on entering into joint development agreements, redevelopment agreements with landowners or developers or societies, and slum rehabilitation projects, which requires lower upfront capital investment compared to direct acquisition of land parcels. Business model allows us to minimise the upfront capital expenditure compared to direct acquisition of land parcels, which ensures that our capital allocation is balanced and calibrated, allowing us to generate revenue with lower initial investments. With our experience, we have been able to institutionalize the development process, which includes managing the relationships with all stakeholders in the project.
The company have adopted an integrated real estate development model, with capabilities and in-house resources to execute projects from its initiation to completion. The company have developed in-house competencies for every stage of the property development life cycle, commencing from business development, which involves identification of land parcels and the conceptualization of the development, to execution, comprising planning, designing and overseeing the construction activities, marketing and sales. As of June 30, 2022, the company had 1,542 channel partners who present the Rustomjee portfolio to their customers and drive customers traffic to our projects. In addition to our in-house competencies, we also leverage the expertise of external specialists to match our wide range of operations, such as architects, interior designers, landscaping experts, engineers and building services consultants for the development and management of their projects.
Financial Snapshot
Key Operational Figures
Strength of the company
Operational highlights
The following table shows the locations and developable area of they have Completed, Ongoing Projects and Forthcoming Projects as of June 30, 2022:
Classification of the project
Ongoing Projects and Forthcoming Projects in India, as of June 30, 2022:
Some of their notable projects:
Rustomjee Elements. Rustomjee Elements is an upscale residential estate spread over 4.99 acres in the Mumbai Andheri-Dahisar region. It includes seven towers for sale aggregating to a total of 173 units. The project design is replete with an array of conveniences for each home such as scenic greenery view on the east and sea views on the west. The outdoor space boasts of 190 full green trees, a reading corner, multi-games court, reflexology path, and dry fountains. Residents can also enjoy the rooftop with amenities including a party deck, a sky deck, a mini bar, a barbeque pod, a jacuzzi pool and an infinity edge swimming pool.
Rustomjee Seasons. Rustomjee Seasons is a gated community spread across 3.82 acres in BKC Annexe, which is minutes away from the Western Express Highway, prominent corporate headquarters, premier educational institutions and entertainment hubs. The design of the gated community was conceptualized by architect Sanjay Puri and includes more than 20 lifestyle amenities such as an open-to-sky podium and swimming pool, a maze garden, a toddlers creative Studio, a mini-theatre and the Miyawaki forest which offers lush green spaces in the heart of MMR to enhance the lifestyle of the residents.
Rustomjee Paramount. Rustomjee Paramount is a signature gated community spanning across an expansive 3.50 acres in the heart of Khar West. The project is focused on community living and the interior design of residences was conceptualized by architects such as Sanjay Puri, where luxury residences comprise spacious sundecks, fullheight French windows and panoramic views of the Arabian Sea and city skyline. The apartment infrastructure is also designed to be senior-friendly, and the community facilities include, amongst others, touchless elevators, touchless entry lobbies, an alfresco sky lounge, a senior citizens alcove and a multi-purpose play court.
Rustomjee Crown. Rustomjee Crown comprises three high-rise towers spanning across 5.75 acres in the Prabhadevi, South Mumbai. Since its inception, Rustomjee Crown has been conceptualized by Hafeez Contractor, with the goal of creating a luxury community living experience for the residents of South Mumbai. Rustomjee Crown offers amenities to provide a secure, private and noise-free living experience, including the solitude forest, cascading waterfalls with hot tubs, a lagoon pool, a leisure pool, an all-weather pool, a lazy river, an aroma garden, a celebration lounge, a floating lounge and a viewing deck.
Management
Boman Rustom Irani is the Chairman and Managing Director of our Company. He holds a bachelor’s degree in engineering from M.H. Saboo Siddik College of Engineering. He has over 26 years of experience in the real estate industry. He has been a director on our Board since 2005.
Chandresh Dinesh Mehta is an Executive Director of our Company. He holds a bachelor of technology in electrical engineering from Banaras Hindu University, Varanasi and a post-graduate diploma in management from Xavier Institute of Management, Bhubaneswar. He has 18 years of experience in real estate industry. He has been associated with our Company since 2004.
Financial
I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Stocx Research Club). I have no business relationship with any company whose stock is mentioned in this article.
Source - Company RHP, website. Disc - This is not an recommendation as it is for a knowledge purpose only.
I am not a SEBI Registered individual/entity and the above research article is only for educational purpose and is never intended as trading/investment advice.
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