Runwal Enterprises Targets 2:1 Debt-Equity Ratio After IPO: Chairman

Mumbai: Real estate developer Runwal Enterprises plans to bring down its debt-to-equity ratio to 2:1 from the current 3:1 following its proposed initial public offering, as it steps up efforts to reduce leverage and adopts an asset-light growth strategy.

“Currently, the debt-to-equity ratio is 3:1, which we will bring down to 2:1,” Subodh Runwal, chairman and managing director of Runwal Enterprises, told PTI in an interaction.

The company is gearing up to launch its Rs 500-crore initial public offering (IPO) on September 25, marking the company’s entry into the primary market.

The company has fixed a price band of Rs 290-305 per equity share. The issue, comprising entirely a fresh issuance of equity shares aggregating up to Rs 500 crore, will conclude on September 29.

Proceeds from the fresh issue will be used for payment of debt, funding acquisition of future real estate projects and general corporate purposes.

The company plans to use Rs 350 crore from its IPO proceeds to repay debt.

The company’s current debt stands at around Rs 2,350 crore, primarily comprising term loans from ICICI Bank and IndusInd Bank.

Subodh Runwal said the IPO is only the first step towards reducing debt and that it would take further measures to bring down leverage.

Runwal Enterprises had initially planned to raise nearly Rs 1,000 crore through the IPO when it filed its Draft Red Herring Prospectus (DRHP) around 18 months ago.

However, its capital requirement has since fallen to Rs 500 crore, following partnerships with international investors and a shift towards an asset-light model.

Runwal said its collections were close to Rs 2,000 crore last year and its profit after tax had doubled to around Rs 180 crore from Rs 90 crore over the last two years.

On project execution, the company said it has been consistently delivering around 1.5-2 million sq ft and the pace of delivery is increasing.

The developer is also looking to expand its presence beyond its traditional stronghold of eastern and central Mumbai, with the management saying it plans to “aggressively look at opportunities in the western suburbs”.

“We started as a dominant player in the eastern suburbs and the central suburbs and now we are expanding. So, we will look at good opportunities in the western suburbs also,” it said.

Runwal has also entered premium and luxury developments in areas such as Mahalakshmi and Marine Drive, while evaluating opportunities in other western suburbs.

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