Up 300% In 1 Year: This Multibagger Realty Stock Plans Fund Raise Of Rs 1,500-2,000 Crore In Stock Sale

DB Realty Ltd is set to raise Rs 1,500-2,000 crore through a stock sale to qualified institutional investors. The Mumbai-based property developer, facing a tumultuous past, aims to complete the fundraising in the coming weeks, signalling a potential turnaround for the company.

DB Realty faced setbacks following the involvement of its promoters, Shahid Balwa and Vinod Goenka, in the 2G spectrum allocation scam. Although acquitted in December 2017 due to a lack of substantial evidence, the prolonged legal battle resulted in project delays and lenders turning away, affecting the company's financial stability.

To execute its fundraising plans, DB Realty has enlisted the support of investment banks JM Financial and DAM Capital. Moneycontrol sources reveal ongoing talks with investors, citing positive investor appetite. The company is eager to launch the deal in the next few weeks, pending favourable market conditions.

The fundraising comes on the back of DB Realty's stock witnessing a surge of 46% since the beginning of the year, reaching Rs 267.70 per share. Over the past 12 months, the stock has quadrupled, signalling growing confidence among investors.

The fundraising initiative will result in a 10-15% dilution for existing shareholders, with the promoters currently holding a 50.89% stake as of December 31. Notably, Rakesh Jhunjunwala's family owns a 4.98% stake in the company. The company had earlier issued warrants in 2022, raising Rs 1,544 crore, which was utilized to reduce debt.

The funds raised through stock sales will be primarily allocated to further debt reduction and investment in both new and existing projects. In a recent notice to shareholders, DB Realty emphasized the intention to bolster its capital base and fortify its financial standing and net worth.

DB Realty has been actively seeking to revamp itself over the last few years, partnering with key players and monetizing assets. For the nine months ending December 31, the company reported a consolidated net profit of Rs 1,330 crore, a significant turnaround from a loss of Rs 77 crore in the previous year.

In FY24, the company successfully sold its stake in two joint ventures with Bengaluru-based developer Prestige Estates Projects for Rs 1,176.5 crore. The earnings release highlighted partnerships with Adani Property, Godrej, Prestige Estate, and Man Infra for the ongoing development of almost 16 million sq ft of residential, hotel, and commercial properties.

As part of its turnaround strategy, DB Realty aims to demerge its hotel business to unlock additional value. The company's board announced on February 9 that this move would enable a distinct strategy to capitalize on the potential of the Indian hospitality sector. It is expected to attract a unique set of investors, partners, collaborators, and leadership talent focused on the hospitality business.

The company's financial statement for the nine months ending December 31 showcased a consolidated net profit, signalling a successful turnaround. With standalone secured debt at zero and consolidated secured project-related debt at approximately Rs 1,900 crore, DB Realty appears poised for a rejuvenation.

The shares of DB Realty closed with cuts of nearly 3% at Rs 262.70 per share on Wednesday. The stock has gained more than 300% in the last one year.