Welcome! This article provides a comprehensive overview of an upcoming Main Board IPO, specifically the Knowledge Realty Trust REIT. With an issue size of ₹4800 crore, we will explore its financial health, IPO dates, price band, and other crucial details to help you understand this investment opportunity.
Key IPO Details
The Knowledge Realty Trust REIT IPO is scheduled to open on August 5th and close on August 7th. The allocation status will be available by August 12th. Refunds for non-allotment will be processed on August 13th, and shares will be credited to demat accounts on the same day. The company is expected to list on both BSE and NSE on August 18th.
This is a fresh issue totaling ₹4800 crore, entirely through a book-building process. Being a REIT, a face value is not applicable. The upper price band for the IPO is set at ₹100 per share. Investors will need to apply for a minimum of 150 equity shares per lot.
Financial Health Analysis
Analyzing the company’s financial health provides insight into its performance.
Assets: The company’s assets stood at ₹24,544 crore in FY23. This saw a slight improvement to approximately ₹24,902 crore, before showing a minor drop to ₹24,768 crore. In the business segment the company operates, assets play a crucial role, with increased assets generally leading to higher revenue.
Total Income (Revenue): The company’s total income has shown an upward trend. In FY23, it was around ₹315-316 crore, increasing to ₹3588 crore in FY24, and further to ₹4146 crore currently. This indicates overall year-on-year revenue improvement.
Profit After Tax: Despite revenue growth, the company’s profit after tax has shown variability. Initially, the company’s profit was ₹219 crore, then increased to ₹340 crore. However, it has currently reached ₹2223 crore, though the profit is noted to be showing a drop, indicating a need for improved profitability in the future.
EBITDA: The company’s EBITDA was ₹2494 crore, followed by ₹2830 crore, and then ₹3293 crore.
Borrowings: Total borrowings were approximately ₹20,000 crore, then ₹19,757 crore, and currently stand at ₹19,792 crore. This indicates a significant level of borrowing for the company.
IPO Objectives
Out of the total ₹4800 crore issue size, the company plans to utilize ₹4640 crore for partial or full repayment and prepayment of certain financial borrowings. The remaining funds will be used for general corporate purposes.
Understanding Knowledge Realty Trust REIT
Knowledge Realty Trust REIT is structured as a trust that typically holds various commercial buildings. Income is generated from the rent collected from these properties. This income, after expenses, contributes to the company’s profit, from which it may pay dividends to its shareholders. REITs often offer a dividend yield of 6-7%, making them attractive to investors who cannot directly own large commercial properties.
Competitive Strengths
The company boasts several competitive strengths:
- It is the largest office REIT with strategically located assets in India’s top-performing markets.
- It possesses high-quality assets with robust infrastructure and a wide presence.
- The REIT also has a diversified tenant base, with an increasing focus on leading domestic corporates.
- Furthermore, long-standing relationships with its sponsors contribute to a strong business model and future growth.
The company’s total gross asset value is approximately 61,989 million. It manages 30 Grade A offices, many developed in well-known areas, generating rental income that is typically distributed as dividends to shareholders.
IPO Allocation and Investor Categories
The IPO allocation is structured with 75% of the shares reserved for Qualified Institutional Buyers (QIBs), including anchor investors. The remaining 25% is allocated to High Net-worth Individuals (HNIs). Notably, individual retail investors will also apply under the HNI category as there is no specific retail portion reserved. Given the nature of REITs, large investors, typically HNIs, are the primary participants. Small retail investors can observe for study purposes. For HNI category applicants, a minimum investment of approximately ₹15,000 is required.
Grey Market Premium (GMP)
Generally, REIT IPOs do not show a Grey Market Premium (GMP), and this IPO is no exception; no GMP is currently observed.
Conclusion
With a substantial issue size, the Knowledge Realty Trust REIT IPO presents an interesting opportunity for observation. Investors, especially large ones, often find REITs appealing due to their dividend-paying nature. Retail investors, while not having a specific reserved portion, can use this IPO as a case study to understand future similar investment opportunities. Further details and updates will be shared. What are your thoughts on this company? Feel free to comment below.
