Stock of this real estate company has zoomed over 100% in one month
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Shares of D B Realty surged 6 per cent to hit an over 10-year high of Rs 156.90 on the BSE in Thursday’s intra-day trade. In the past one month, the stock price of the real estate company has more than doubled or zoomed 108 per cent. In comparison, the S&P BSE Sensex was down 1.5 per cent and S&P BSE Smallcap index gained 6 per cent in one month.
The stock had hit an all-time low of Rs 3.65 on April 22, 2020.
D B Realty is engaged primarily in the business of real estate construction, development and other related activities. The company is jointly promoted by Mr Vinod K. Goenka and Mr Shahid Balwa.
The management is addressing the issue of high debt, for which the company has entered into one time settlement with various lenders the effect of which would be reflected upon completion of settlement terms, raised funds through issued convertible warrants, and agreement / joint ventures to revive various projects with significantly high growth potential, it said.
D B Realty said that during the April-June quarter, it had various debt obligations (excluding corporate guarantee) aggregating to Rs 999.01 crore within next 12 months. These obligations are higher than the liquid assets out of current assets. This could result in significant uncertainty on its ability to meet these debt obligations and continue as going concern.
The management is confident and has made plans to manage the liquidity position by restructuring the existing terms of borrowings, monetization of non-core assets, mobilization of additional funds and conversion of outstanding warrants into equity shares, the company said.
Meanwhile, D B Realty on August 11 announced plans to diversify into the hospitality business through a series of acquisitions. This strategic move will involve the redemption of the company’s investments in Marine Drive Hospitality and Realty (MDRHPL).
D B Realty announced acquisition of 50 per cent stake of Bamboo Hotels & Global Centre Delhi, acquisition of 100 per cent stake of Goan Hotels & Realty Private Limited and 75 per cent stake of BD&P Hotels (India) Pvt. Ltd subject to necessary approvals.
The above investment will mark DB Realty's entry into the hospitality division with 2 operational five star hotels comprising of 504 operational rooms and future expa nsion potential of 187 Room in these 2 hotels and 50 per cent economic interest in another 779 room (990 Bays) under construction alongwith leasable space/business centre of 6.15 lakh sqft to be ready by FY 2025-2026, the company said.
As per D B Realty's management, the EBIDTA from the Hotel business in FY-25 is expected to be around Rs 180 crore. The acquisition of the assets is being funded largely from the redemption of D B Realty's investment in MDRHPL.
Upon approval of shareholders of D B Realty and other necessary statutory approvals and obtaining consents from lenders and completion of the transaction, D B Realty shall substantially exit from its investments in the form of preference shares in MDRHPL.
This transaction upon completion will result in unwinding of most investments inter-se between D B Realty and MDHRPL (part of the promoter Group}, the company said.
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