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  • Writer's pictureJatin Agarwal

Nexus REIT IPO



Company overview:


The owner of India's largest consumption centre platform of premium assets, Nexus Select Trust provides the country's expanding middle class with crucial consumption infrastructure. Once its units are listed on stock exchanges, it anticipates becoming India's first publicly traded consumption centre REIT. The Indian economy has been mostly driven by consumption growth over the past ten years, and it is believed that its Portfolio is well-positioned to profit from the spending tailwinds of India's expanding middle class and quick urbanization. With a strong business strategy and varied asset base that can function as a natural hedge against inflation, its Portfolio presents a compelling potential to profit from India's consumer boom.

Nexus Select Trust REIT date is fixed, the IPO is to hit the market on May 9 and will close on May 11. Nexus Select Trust REIT to raise around ₹3200 crores via IPO that comprises fresh issue of ₹1400 crores and offer for sale up to ₹1800 crores.


Financials (rounded off):

Date

Total Revenue (₹ in cr)

​​​PAT (₹ in cr)

​31/03/2020

1708

207

31/03/2021

1048

(199)

31/03/2022

1398

(11)

Objectives of the Issue:


The Nexus Select Trust will not receive any proceeds from the offer for sale and the proceeds received will not form part of the net proceeds. The Net Proceeds from the Fresh Issue will be utilized towards the following objects:

1) Partial or full repayment or prepayment and redemption of certain financial indebtedness of the Asset SPVs and the Investment Entity.

2) Acquisition of stake and redemption of debt securities in certain Asset SPVs.


IPO Details:

IPO Date

09/05/2023-11/05/2023

Face Value

-

IPO Price Band

₹95-₹100 per share

IPO Lot Size

150 Shares

Listing at

NSE, BSE

Basis of Allotment

16/05/2023

Credit of Shares in Demat

18/05/2023

Listing Date

19/05/2023

Pre-Issue Shareholding

-

Post-Issue Shareholding

-

Retail Minimum Lot Size

150 shares (₹15,000)

Important things to note about the company:


Strengths

1. Located in India, one of the world’s fastest-growing consumption-led major economies .

2. India’s largest platform of best-in-class assets with a presence in 14 of India’s key consumption cities .

3. Highly occupied by a diversified tenant base of renowned national and international brands .

4. Strategically located in prime in-fill locations with high barriers to entry.

5. Fully integrated platform with a highly experienced management team.


Risks

1. Has a Rs.5,662 crore outstanding debt as of September 2022. Debt repayment may affect operations and cash flow.

2. The company could be harmed by low occupancy and rent levels.

3. The top ten clients comprise 35.9% of the building's occupied space and 21.6% of its gross rentals.

4. Heavily reliant on the health of the Indian real estate market.

5. A track record of net losses. Both FY21 and FY22 saw losses.


Crisp Insights:

  • Like rentals on a property, REITs offer certain amount of yields to unit holders, which is supposed to be better for the conservative investor, compared to fixed deposits and other debt instruments.

  • In the case of Nexus REIT, the yield works out to 8.25 percent (compounded quarterly), based on cash flows and distributable income of the fund till fiscal 2024. Calculations suggest a person who falls in the 30 percent tax bracket would be generating a yield of close to 7.2 percent (on post-tax basis).

  • On a comparable basis also (based on fiscal 2023 numbers), the other listed players, like Embassy Office Park, Mindspace Business Park and Brookfield REIT, offer a yield of close to 7 percent. Even if we assume growth in fiscal 2024, the offered yield on Nexus REIT should be 50-80 basis points higher than those of other players.

  • Hence, from the yield point of view, this is the best REIT that is getting listed in Indian markets.


Disclaimer: All information is provided for educational and informational purpose only. Data is fetched from publicly available sources such as the DRHP filed by the company. The website or the author takes no guarantee for the accuracy of the data however, we have tried our best to present accurate data to out readers. Please consult a financial advisor or do your own analysis before investing/trading in the stock market.




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