Signature Global IPO this week: Affordable realty firm pivots to mid-income housing, avoids luxury projects

Introduction:

Week’s Signature Global IPO: Affordable real estate firm pivots to mid-income homes, avoids luxury projects.

According to Signature Global co-founder and managing director Ravi Aggarwal and CEO Rajat Kathuria, the transition to mid-income housing was prompted by customer feedback during COVID-19. They further claim that the corporation will focus on Delhi-NCR in the next 3-5 years.

Signature Global’s initial public offering (IPO) is slated to begin bidding on September 20. The real estate firm, which was previously focused on inexpensive homes in the Delhi-National Capital Region (NCR), has now shifted its attention to the mid-income housing category.

Week’s Signature Global IPO

This trend is the outcome of COVID-19, which has resulted in people seeking larger homes, according to Signature Global founder and chairman Pradeep Aggarwal and chief executive officer Rajat Kathuria in an exclusive interview with Moneycontrol.

However, the corporation is delaying its entry into the premium market for the time being. Excerpts have been edited: Signature Global has a 17 percent market share in the budget category in 2020. It will be 9% in 2022. It has not recovered significantly since the outbreak.

When do you expect a comeback?

Kathuria, Rajat: You’re probably talking about market share in terms of volume, not value. From FY21 to FY23, we continually increased, nearly doubling our pre-sales level. In FY21, sales were at Rs 1,600 crore. In FY23.
However, we have shifted our focus to mid-income housing. We had a lot of client feedback after the pandemic, and customers wanted one more room and additional space. We boosted the supply of the mid-income product to address this. So, if you look at the budget category, the number may have decreased slightly.

Signature Global is limited – Week’s Signature Global IPO

You stated that Signature Global will be among the top five real-estate players, not the top three. However, the top five have a pan-India presence, whereas Signature Global is limited to the NCR. What do you think will happen?

Rajat Kathuria: Week’s Signature Global IPO : We believe there are still significant supply restrictions. This means that even if we raise our present supply scale, there will be enough demand to consume that supply. So, at this point and in the near future, the Delhi-NCR market is looking bright. We don’t want to stray from that plan. Furthermore, we are not competing to be in any of the top three or five lists. It is more formal.
How do you intend to expand in the NCR, given the region’s restricted real-estate development opportunities? Even your Red Herring Prospectus highlights the scarcity of developable land in Haryana and the Delhi NCR. As a result, acquiring new land in such locations may provide some difficulties.

What are your thoughts about that?

Pradeep Aggarwal: Gurugram’s infrastructure has greatly improved in the recent 5-7 years. The Dwarka Expressway, works for many years, inaugurated at any time. Since July of last year, an elevated route from Rajiv Chowk to Sohna has been in service. The entire Delhi-Mumbai corridor link.

Gurugram is becoming a hub for IT and automobile firms, as well as some excellent IB schools. A lot of work chances developed in such a setting. As a result, there is a demand for residences in Gurugram. Furthermore, as housing prices have risen following COVID 19, many individuals are relocating to Gurugram. We also have well-known investors such as IFC and HDFC who have been with the company for a long time. As a result, our corporate governance is quite solid.

So, will Gurugram be your primary concentration area?

Pradeep Aggarwal: For the next 3-5 years, we would concentrate on the Delhi-NCR region. We focus on inexpensive and mid-income housing rather than ultra-luxury because our consumers are largely salaried. Customers from the middle class are more likely to take out home loans. As a result, we have consistent customers, which will improve our business.

High demand for luxury housing

What motivates you to focus on affordable housing when the luxury and premium housing segments are gaining traction? Do you believe you have a better possibility of earning more in the cheap housing section than in the luxury housing category?

Pradeep Aggarwal: There has been a slight increase in demand for larger houses since COVID 19. This is why we have shifted our focus from inexpensive housing to mid-income housing. During this time, there is a high demand for luxury housing. Whatever the project type, there is demand in all segments.

The demand for inexpensive and middle-income housing has always exist and continue to exist in the future. Gurugram’s population expects to exceed 50 lakh in the next 15 years. So my intention is crystal clear. In the next 3-5 years, we intend to maintain our focus on low and middle-income homes.

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