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Signatureglobal (India) Limited
IPO Analysis
About The Company
Incorporated in 2000, Signatureglobal (India) Limited is a real estate development company. The company operates in the National Capital Region of Delhi ("Delhi NCR") focussed on offering affordable and mid-segment housing in terms of units supplied.
Signatureglobal (India) started its operations with its Solera project on 6.13 acres of land in Gurugram, Haryana and today has grown tremendously. As of March 2022, the company had sold 23,453 residential and commercial units, all located within the Delhi NCR region. In terms of Sales Growth too, they have attained a CAGR of 142.62%, from Rs. 4,400.10 million in Fiscal 2020 to Rs. 25,900.38 million in Fiscal 2022.
Signatureglobal (India) Limited focuses on GoI and state government policies supporting affordable housing in order to assist customers to realize their dream of having their own home. Policies like Affordable Housing Policy, 2013, Affordable Plotted Housing Policy or the Deen Dayal Jan Awas Yojana ("DDJAY - APHP"), and so on.
The company aspires to offer "value homes" which are a combination of attractive designs and amenities. Another aspect that the company proactively seeks is to enhance the value of its projects and create a better living environment.
Business Overview
The company is the largest real estate development company in the National Capital Region of Delhi (“Delhi NCR”) focussed on affordable and mid segment housing in terms of units supplied (in the below ₹ 8 million price category) between 2019 and 2021 with a market share of 19%.
Company commenced operations in 2014 through their Subsidiary, Signature Builders Private Limited, with the launch of their Solera project on 6.13 acres of land in Gurugram, Haryana. They have grown their operations over the years and in less than a decade, and as of March 31, 2022 and had sold 23,453 residential and commercial units, all within the Delhi NCR region, with an aggregate Saleable Area of 14.59 million square feet. Their Sales (net of cancellation) have grown at a compounded annual growth rate (“CAGR”) of 142.62%, from ₹ 4,400.10 million in Fiscal 2020 to ₹ 25,900.38 million in Fiscal 2022. As of March 31, 2022, the company have sold 21,478 residential units with an average selling price of ₹ 2.81 million per unit.
The company have strategically focused on GoI and state government policies supporting affordable housing, specifically the Affordable Housing Policy, 2013 notified by the Town and Country Planning Department, Government of Haryana (“AHP”) and the Affordable Plotted Housing Policy or the Deen Dayal Jan Awas Yojana (“DDJAY - APHP”). Each of the policies is focused on affordable and mid segment housing. The AHP aims to encourage planning and completion of group housing projects under which apartments of a pre-defined size are to be made available at pre-defined rates and completed within a targeted time-frame to ensure increased supply of affordable housing, while the DDJAY - APHP is intended to encourage the development of high density plotted colonies in the state of Haryana. Most of their Completed Projects, Ongoing Projects and Forthcoming Projects are located in Gurugram and Sohna in Haryana, with 84.58% of their Saleable Area located in this region, and almost all of our projects have been, or are being, undertaken under the AHP or the DDJAY - APHP. In terms of sales in Gurugram, the company had a market share of 40% in the affordable and mid segment, and a market share of 29% in all budget categories, in the period from 2019 to 2021.
The AHP permits for greater density, which is the number of persons per acre, that enables us to build smaller unit sizes leading to improved saleability. In addition, lower regulatory costs with waiver of license fee and infrastructural development charges for developers coupled with higher floor area ratio (“FAR”) for residential development and commercial development are some of the other benefits available under the AHP. Under the DDJAY - APHP as well, higher density, smaller plot sizes and higher FAR compared to that for a residential plotted colony enable us to offer units at competitive prices allowing us to expand our operations.
In their experience, these benefits have made it viable for them to offer projects at affordable prices at premium locations while remaining profitable. As of March 31, 2022, they were the largest real estate developer under the AHP in the Gurugram and Sohna region, with a market share of 23% in terms of total supply of units in the period from 2019 to 2021. The company were also the largest real estate developer under the DDJAY – APHP in the Gurugram and Sohna region, with a market share of 49% of the total supply of units under DDJAY – APHP floors in the period from 2019 to 2021.
As of March 31, 2022, the company had completed an aggregate Developable Area of 4.08 million square feet in their Completed Projects and an additional 0.55 million square feet in their Ongoing Projects, comprising 6,282 residential units and 566 commercial units, for which the company have received occupation certificates. The company have sold 21,478 residential units, amounting to 95.14% of the total number of residential units launched in their Completed and Ongoing Projects as of March 31, 2022. In addition, brief details regarding their Completed, Ongoing and Forthcoming Projects, as of March 31, 2022, have been set out below:
The comany have adopted an integrated real estate development model, with in-house capabilities and resources to execute projects from inception to completion which enables us to offer their projects at competitive prices. Among their core strengths is their ability to efficiently turnaround projects on land that they ahve tie-up and have typically launched projects within a period of 18 months from the date of acquisition of the land. Company's high asset turnover has enabled them to generate positive cash flows in a relatively short period of time to support further developments. The company standardized business processes, technical specifications and layout plans have resulted in low design costs and faster replication resulting in shortening their development cycle and construction time. To reduce construction time significantly, company also deploy aluminium formwork technology in their projects, which also reduces costs. These factors have also resulted in them delivering projects ahead of their scheduled completion. For example, they completed their project, Solera within 3 years and 9 months, which is almost three months in advance of the period mandated for completion. The Department of Town and Country Planning, Government along with the Haryana Real Estate Regulatory Authority recognized the development of their projects at the Urban Development Conclave. For further information, please see the section entitled “History and Certain Corporate Matters” on page 189.
The following table sets forth certain performance indicators of our operations for the periods indicated:
Company's Strength
Largest affordable and mid segment real estate developer in Delhi NCR.
The company are the largest real estate development company in Delhi NCR focussed on affordable and mid segment housing, in terms of units supplied (in the below ₹ 8.00 million price category) between 2019 and 2021 with a market share of 19%. The company have considerable experience in project execution in the affordable and mid segment housing and are also among the leading residential real estate developer in Delhi NCR with a 13% market share in terms of units supplied between 2019 and 2021 (across all budget categories) (Source: Anarock Report). As of March 31, 2022, the company have sold 21,478 residential units, with an average selling price of ₹ 2.81 million per unit.
The company offerings have been focussed on the affordable and mid segments in Delhi NCR which have significant demand. In the past five years, absorption has outnumbered supply in the affordable and mid segment category and inventory has been witnessing a continuous decline, indicating sustainable demand in these categories (Source: Anarock Report). According to the Anarock Report, in the period from 2017 to 2021, residential units less than ₹ 8.00 million per unit represented 78% of the aggregate sales among residential real estate projects in India (Source: Anarock Report). As of March 31, 2022, the company had sold 17,152 units under the AHP, amounting to 97.87% of their units launched under the AHP. As of March 31, 2022, they had also sold 4,326 units under the DDJAY – APHP, amounting to 85.66% of our units launched under the DDJAY – APHP.
Well-established brand, strong distribution network and digital marketing capabilities translating into faster sales
They have have within a relatively short period of time developed a strong brand and customer goodwill based on their track record of delivering “value homes”. The company have also provided strategically-located, distinctive-design projects with an array of amenities, all at affordable prices. The company believe that the strength of a real estate developer’s brand is a key attribute that influences customer decision. The company have succeeded in developing a distinct brand leveraging their comprehensive understanding of customer needs and unwavering focus on delivering quality projects and customer-centric services. The strength of their brand is also reflected in various awards and recognitions received by them and their projects, including Best Affordable / Budget Housing Developer of the Year at the 13th Annual Estate Awards 2021, Developer of the Year, Residential, at the 13th Realty+ Conclave and Excellence Awards (North), 2021 and Best LIG Housing Project for our project Solera at the PMAY Empowering India 2019, presented by the Minister of State, Ministry of Housing and Urban Affairs, GoI.
In order to further strengthen our brand, the company have engaged celebrity brand ambassadors for various campaigns from time-to-time. In addition, renowned actress and Padma Shri recipient, Vidya Balan, is their brand ambassador and has been associated with the “SignatureGlobal” brand for over five years. The company have undertaken various advertisement and promotional campaigns across India communicating their mission “Har Pariwar Ek Ghar” under which the company have run campaigns like “Apna Ghar Toh Apna Hi Hota Hai”, “Apne Ghar Pe Kaisa Lockdown”, “Kiraye Se Azaadi”, “Diwali Apne Ghar Wali” and “Smart Decision”. The company have also run project-specific campaigns such as the “Independent Floors for the Independent You” campaign in 2020 to promote their newly launched “independent premium floors” project, which highlighted various age groups, genders and ideologies. These campaigns were well received and generated 29.89 million views across various social media platforms, as of June 4, 2022. In addition, their campaign in August 2021 called “Life at Signature Global” showcased benefits of living in a gated community, and received 13.82 million views across various social media platforms as of June 4, 2022. the company also have an established presence across different social media platforms, as shown in the table below:
Fast growing with ability to scale up rapidly
The company have demonstrated their ability to scale up rapidly by growing their project portfolio from 9.06 million square feet of Saleable Area as on March 31, 2018 to 38.67 million square feet of Saleable Area as on March 31, 2022, which includes the Saleable Area of thier Completed Projects and Ongoing Projects and the estimated Saleable area of their Forthcoming Projects. The company launched their first project in 2014 and as of March 31, 2022, they had sold 23,453 units with an aggregate Saleable Area of 14.59 million square feet. As of March 31, 2022, they had 27 Ongoing Projects comprising approximately 16.10 million square feet of Saleable Area. Their Sales have increased at a CAGR of 142.62% from ₹ 4,400.10 million in Fiscal 2020 to ₹ 25,900.38 million in Fiscal 2022.
Further, the company have launched 4,752 units, 5,209 units and 5,739 units in Fiscal 2020, 2021 and 2022, respectively, which amounted to 2.85 million, 3.50 million and 4.01 million square feet of Saleable Area for the corresponding periods. The company have replicated their business model across micro-markets in Delhi NCR and particularly in Gurugram, Haryana and have continuously expanded their business to capitalize on their strong brand name. The company have been able to scale up at a rapid pace owing to their standardized design, technical specifications and layout plans, which they also anticipate will allow them to expand their operations speedily in future. The track record in execution and continued construction has been instrumental in their consistent Sales and performance, despite challenging market conditions due to the COVID-19 pandemic. The table below sets forth details of the units sold and the completed units and areas under our projects for the periods indicated:
Business Strategies
Business Operations
The table below sets forth certain key operational information relating to our projects, as of March 31, 2022:
Completed Projects
Set forth below is a brief description of certain of our Completed Projects:
Ongoing Projects
Set forth below is a brief description of certain of our Ongoing Projects:
Projects
Residential Projects
The amenities associated with our residential accommodation are designed to meet the aspirations of a segment that is underserved in terms of amenities and housing options within the price range, and as such, our products are seen more as “value housing” rather than “affordable housing”.
In order to decide on the particular location, design and specification for our residential projects, we analyse various qualitativeand quantitative data obtained through pre-commencement market research undertaken by our internal development team which considers a number of factors, including target population in the target areas and feasibility of a particular location. The type of development is determined accordingly. We are able to market and sell these projects within a specified price range which is more feasible to our customer base by optimizing the size of our residential units; and by applying innovative construction technologies and efficient designs that result in cost savings. Our housing projects are primarily targeted at first time homebuyers.
AHP
The AHP aims to encourage planning and completion of group housing projects under which apartments of a pre-defined size are to be made available at pre-defined rates and completed within a targeted time-frame to ensure increased supply of affordable housing. Our residential projects under the AHP are primarily apartment-type housing, usually priced below ₹ 3.00 million per unit, with majority of the residential project located at Gurugram and one project located at Sohna, typically equipped with additional amenities such as recreational areas, gardens, open spaces and community halls. The size of our apartments under the AHP ranges from 356 square feet to 645.79 square feet. Certain of our projects under the AHP include Serenas, Synera and Millennia 4.
DDJAY - APHP
The DDJAY - APHP is intended to encourage the development of high density plotted colonies in the state of Haryana. Under the DDJAY - APHP, higher density, smaller plot sizes and higher FAR compared to that for a residential plotted colony enable us to offer units at competitive prices allowing us to expand our operations. Our residential projects under the DDJAY - APHP are primarily independent floor apartment-type housing in a plotted colony, usually priced between ₹ 4.00 million and ₹ 8.00 million per unit, with residential projects located at Gurugram and Sohna, typically equipped with additional amenities such as gymnasiums, recreational spaces, entertainment centres, swimming pools and sporting facilities. The size of our apartments under the DDJAY – APHP ranges from 568 square feet to 1,440 square feet of Saleable Area. Certain of our projects under the
DDJAY - APHP include Sunrise, Park 2 and City 92.
OTHER PROJECTS
As part of our Forthcoming Projects, we are also developing certain projects outside the AHP and DDJAY - APHP, such as retail spaces, residential spaces under the HGHP, industrial spaces under the Enterprise Promotion Policy (“EPP”), and Shop Cum Office (“SCO”) units under the Commercial Plotted Policy.
Completed Projects
Most of our Completed Projects are situated in Gurugram, Haryana or Sohna, Haryana. The following table sets forth certain information on our Completed Projects, as of March 31, 2022:
As of March 31, 2022, out of five Completed Projects, four were located in Gurugram with an aggregate Saleable Area of 2.09 million square feet, and one was located in Sohna with an aggregate Saleable of 0.77 million square feet.
Further, for certain of our Ongoing Project, the occupation certificate has been received for a part of the project. The details of such areas in our Ongoing Projects, for which occupation certificates have been received, are set forth below:
Management Of The Company
Pradeep Kumar Aggarwal - Chiarman
Lalit Kumar Aggarwal - Vice Chairman
Ravi Aggarwal - MD
Devender Aggarwal - Joint MD
Financials
Profit and Loss
Object Of The Issue
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. Disc - Not an recommendation, do your own research before apply this IPO
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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