Runwal Ent IPO: Concentration risk, poor cash flows keep experts 'neutral'

Runwal Enterprises IPO review: The IPO of real estate developer Runwal Enterprises Ltd was off to a muted start on the first day of subscription today. As of 3 PM, the IPO was booked 0.24 times, with the portion reserved for Qualified Institutional Buyers (QIBs) subscribed 50 per cent.

 

The Mumbai-focused real estate developer has fixed a price band of ₹290-305 per equity share. The issue will close on September 29.

 

The IPO comprises entirely a fresh issue of equity shares aggregating up to ₹500 crore. The company has reduced the issue size from its earlier plan of a ₹1,000 crore fresh issue.

 

Runwal Enterprises IPO review 

 

SBI Securities has assigned a 'Neutral' rating, citing negative operating cash flows over the last three years.

 

The company reported a revenue/ Ebitda/ adj PAT CAGR of 13.6 per cent/ 30.9 cent/40.8 per cent, respectively, during the FY24-FY26 period. The firm delivered RoCE/ RoE of 9.1 per cent/ 25.1 per cent, respectively, in FY26. 

 

The company has demonstrated strong sales traction, and has a robust pipeline of developable areas, and has initiated geographic diversification with two new projects outside Mumbai. However, it has negative operating cash flows over the last three years, and exposure to project execution and Mumbai-centric concentration risks. 

 

"While growth visibility remains healthy, the company does not materially differentiate itself from peers in a highly competitive sector. Taking the above factors into consideration, we assign a 'Neutral' rating to the company and would like to track the company’s performance over the next few quarters post-issue," SBI Securities said.

 

Swastika has also rated it 'Neutral'. It said that high Mumbai concentration, elevated leverage and execution/revenue-recognition risks remain key concerns.

 

"Long-term investors can consider the stock, supported by its valuation discount and established Mumbai franchise, while conservative investors may prefer to monitor post-listing execution for 1-2 quarters," the brokerage said.

 

Runwal Enterprises IPO GMP

 

Runwal Enterprises shares are commanding a thin premium in the grey market. According to several websites that grey market activities, Runwal Enterprises shares are currently traded at ₹312, reflecting a grey market premium of just ₹7 or 2.30 per cent over the upper end of the price band.

 

Runwal Enterprises IPO allotment status will likely be finalised on September 30, and shares will list on October 5.

 

Runwal Enterprises has said that proceeds from the fresh issue will be used to repay debt, fund future real estate projects, and for general corporate purposes. 

Disclaimer: Views and outlook shared belong to the respective brokerages/analysts and are not endorsed by Business Standard. Readers' discretion is advised.