The India Street analyzed DLF IPO and HDIL IPO recently. Another Delhi based real estate developer, Omaxe Limited plans to raise about Rs.605 crores through their initial public offering. The issue opens on July 17 and ends on July 20. The proceeds of the IPO will be utilized to acquire lands, repay loans and to meet construction costs.
The company was originally promoted by Rohtas Goel as Omaxe Builders Private Llimited in 1989. The primary objective was to venture into construction and contracting business. It became a limited company in 1999 and the name got changed as Omaxe Construction Limited. Now it is just Omaxe limited. The company has executed more than 120 industrial, institutional, commercial, residential and hospital construction projects. Omaxe entered into real estate development in 2001.
Within about 5 years of its entry, it has completed and delivered 10 projects (8 residential and 2 commercial) covering approx 5.13 million square foot area, with on time schedule. About 52 projects are in currently in progress. These include 1 hotel, 14 commercial complexes / shopping malls, 16 integrated townships and 21 group housing projects. Omaxe has declared land reserves of 3,255 acres, representing 150 million square foot of developable area, mainly in North India, but spread across nine states.
The company has received several awards such as ‘Svedala’, ‘Udyog Ratna', ‘Pride of the Country', ‘Arya Vaidya Sala' for excellence in construction.
The following tables show the company’s residential projects:
Delhi:
| Location | Name | Status |
| Bahadurgarh | Omaxe North Avenue | In progress |
| Faridabad | Green Valley Omaxe Hills Omaxe Heights The Forest | Delivered In progress Delivered In progress |
| Location | Name | Status |
| Ghaziabad | Habitat Floors | Delivered |
| Greater Noida | NRI City Omax Palm Greens | Delivered Future plans |
| Gurgaon | The Nile South Avenue Mayfield Garden Olive Apartments Executive Floor | Delivered Delivered Delivered Delivered Delivered |
| Noida | The Forest Royal Residency Grandwoods Omaxe Twin Towers The Forest Spa | Delivered Delivered In progress In progress In progress |
Designer Villas at South Avenue, Gurgaon
Haryana:
| Location | Name | Status |
| Palwal | Omaxe City | In progress |
| Rohtak | Omaxe City | In progress |
| Sonepat | Omaxe City | In progress |
Himachal Pradesh:
| Location | Name | Status |
| Baddi | Omaxe Park Woods | In progress |
Madhya Pradesh:
| Location | Name | Status |
| Indore | Omaxe City Omaxe City II | In progress Future plans |
Punjab:
| Location | Name | Status |
| Derabassi | Omaxe Greens | In progress |
| Patiala | Integrated Township | Future plans |
| Ludhiana | Royal Residency | In progress |
Rajasthan:
| Location | Name | Status |
| Bhiwadi | Group Housing | Future plans |
| Jaipur | Omax City | In progress |
Uttaranchal:
| Location | Name | Status |
| Rudrapur | Omaxe Riveria | In progress |
Uttar Pradesh:
| Location | Name | Status |
| Ghaziabad | Habitat Floors | In progress |
| Lucknow | Omaxe City Omaxe Heights | In progress In progress |
The following tables show the company’s commercial projects:
Delhi:
| Location | Name | Status |
| Jasola Wazirpur | Omaxe Citadel Pearls Omaxe | In progress In progress |
Haryana:
| Location | Name | Status |
| Gurgaon | Omaxe Plaza Wedding Mall House2Home | Delivered In progress In progress |
| Sonepat | Omaxe Mall | Future plans |
Punjab:
| Location | Name | Status |
| Amritsar | Omaxe Terminal Mall Omaxe Novelty Mall |
In progress
In progress |
| Ludhiana | Omaxe Plaza Omaze Mall | In progress In progress |
| Patiala | Wedding Mall | In progress |
Pearls Omaxe at Wazirpur, Delhi
Uttar Pradesh:
| Location | Name | Status |
| Agra | Wedding Mall | In progress |
| Greater Noida | Omax Arcade NRI City Centre Omaxe Cannaught Palace | Delivered
In progress
In progress |
| Indirapuram | Park Plaza | In progress |
| Lucknow | Omaxe City Centre |
In progress |
Except Omaxe Plaza at Gurgaon and Omaxe Arcade at Greater Noida (which have been sold), rest of the commercial projects are ‘Lease only’ model.
The company has got ISO 9001 certification from Det Norske Veritas (DNV), The Netherlands.
Financial performance in the recent past:
(All figures in Rs. Crores)
| Item | 2004 | 2005 |
| Income | 283.73 | 396.60 |
| Expenditure | 264.18 | 367.02 |
| Profit before tax | 17.24 | 26.37 |
| Net profit | 8.35 | 5.04 |
| Item | 2006 | 2007 |
| Income | 819.86 | 1,439.68 |
| Expenditure | 667.27 | 1,083.99 |
| Profit before tax | 146.70 | 322.32 |
| Net profit | 118.82 | 257.26 |
It can be noted from the above tables that the net profit has gone up from Rs. 5 crores in 2005 to about Rs.257 crores in 2007. This indicates strong demand for the real estate sector during this period.
The following table compares the EPS and book value among some listed real estate companies in India.
| Company | EPS | Book value |
| Omaxe | 16.72 | 29.87 |
| Mahindra Gesco | 3.50 | 189.30 |
| Unitech | 7.90 | 2.80 |
| Parsvnath | 5.7 | 69.9 |
| Sobha | 22.2 | 118.3 |
IPO details:
Start Date: 17 July, 2007
End Date: 20 July, 2007
Issue Size: 1,77,96,520 shares
Face Value: Rs.10
Price Band: Rs.265 – Rs.310
Market Lot: 20 shares
Minimum Quantity: 20 shares
Download the RHP (Red Herring Prospectus) here.
Conclusion:
The company’s success has been primarily attributed to professionalism and transparency. It has successfully established in the real estate sector after starting as a civil engineering contractor. The track record of the company in executing the projects is exceptional. At the offer price of Rs.265 – Rs. 310, the P/E ratio is 18 to 20 times the company’s consolidated earnings for 2006 - 07 on the expanded equity base. The offer is at a discount to companies of a similar size in the real estate sector.
Some of its major competitors are concentrated in and around Delhi like DLF, Unitech etc. So this company faces tough challenges since they have to compete with better known players. It also has relatively lesser experience in this field than their main competitors.
Investment can be considered in the IPO with a long term perspective.