Square Yards Plans for an IPO Worth Rs. 1,500 Cr

Square Yards, one of India’s leading real estate consultants, plans to launch an IPO (Initial Public Offering) worth Rs. 1,500 crores, according to market sources. The startup has made preparations for investment bankers for this issue and will soon file its DRHP (draft red herring prospectus) with market regulator SEBI to get the clearance.

This public offer will be a mix of fresh issuance of equity shares and OFS (Offer for Sale) by existing shareholders. So far, Square Yards has raised funds worth US$125 million with US$60 million as equity capital and US$65 as debt capital.

Read along to know the fundamentals behind this company.

About the Company – Square Yards

Square Yards is the largest integrated platform for real estate and mortgages in the country. Its full-stack Proptech platform covers everything real estate related, from search and discovery to post-sales service.

Here is a list of some of its offerings:

• Search and discovery
• Home loans
• Home furnishing
• Property management
• Transactions
• Rentals
• Post-sales services

This Gurugram-based company’s main business is property brokerage, rental services, and home loan brokerage. It also builds B2B (Business to Business) and SaaS (Software as Service) platforms for stakeholders like real estate agents, developers, and banks.

Square Yards is one of India’s top 20 tech startups with respect to GTV (Gross Transaction Value) and the top 50 in terms of revenue. It also happens to be among the country’s few profitable tech startups. The company has developed an extensive network with 1,50,000+ real estate agents, 500+ partner developers and 100+ banks/NBFCs.

In just six years, it has expanded significantly, developing a direct presence in 20+ Indian cities and abroad. This Indian startup has managed to successfully transition into the global landscape, building a presence across 9 countries. A quarter of its revenues come from global markets like Australia, Canada, and the Middle East.

Square Yards also has several B2C (Business to Consumer) platforms, including Square Capital, Interior Company, PropVR, and PropsAMC. They recently acquired Azuro for its rentals and property management services, PropVR for 3D/VR based immersive property experience, and PropsAMC for its real estate intelligence data.

Financial Situation of Square Yards

For the quarter that ended on June 30, 2021, Square Yards saw its revenues increase as property deals surged despite the pandemic’s second wave. The company’s revenue spiked 50% YoY (year-on-year) to Rs. 100.8 crores, while its GTV rose 80% to Rs. 2,197 crores from the previous year. Its total number of property transactions increased 80% from the last year to 3,916.

This is the seventh consecutive profitable quarter for Square Yards. Its gross margins for the quarter stood at 32%, in line with the global trend, against 20% of agency margins. The revenue from global real estate has helped, contributing to 44% of the company’s total margins.

In the last quarter of FY21, the Proptech startup reported a 17% increase in revenue amounting to Rs. 350 crores. Meanwhile, its EBITDA (earnings before interest, tax, depreciation, and amortization) stood at Rs. 50 crores and GTV at Rs. 8,112 crores, 33% higher than the previous fiscal.

The real estate market continues to gain momentum with more than 4.5 million traffic every month and 50,000+ active agents. Besides positive economic activity in India, Square Yards has also benefited greatly from global real estate. As of the June 2021 quarter, the segment has witnessed 200% growth in GTV, 130% in revenues, and 43% in gross margins.

Future Plans of the Company

With its recent acquisitions, Square Yards can offer a full-stack of services, including rentals, property management, home furnishing, home interior, data intelligence, and VR space. Following initial success, the company intends to scale up the new verticals to become a category leader.

In July 2021, the company received US$25 million from Hong Kong-based investment firm ADM Capital. This is a part of Square Yard’s plans to get a capital infusion of US$100 million for expansion and investment in its various verticals across its value chain. With the help of the new institutional partner, the company intends to aggressively invest in brand and personnel.

Strong momentum in the global real estate business and positive economic activity in India are both contributors to the company’s high profitability. Even a new business segment like home interiors has gained Rs. 11 crores in revenues, while rentals have seen continued growth.

Parting Thoughts

Square Yards has an extensive network both in India and global markets. Moreover, it has a capable sales team, market-leading software solutions, and offers a full stack of services. A growing real estate sector and faster adoption of technology place it in a position likely poised for success.

Frequently Asked Questions

1. Is Square Yards a profitable company?

Yes, Square Yards has reported Rs. 250 crores worth of revenues in FY21. It has sold Rs. 6,100 crores worth of properties and facilitated home loans worth Rs. 1,900 crores in the last financial year. 

2. What is the size of Square Yards IPO?

Square Yards is yet to file for a DRHP to SEBI for approval of its IPO. Details like IPO size, investor portion, and possible date of subscription will be revealed once they file the draft papers.

3. Who are the major investors backing Square Yards?

Square Yards has received investments from firms like ADM, Kae Capital, Bennett Coleman and Co Ltd., Reliance Capital, and investors like George Hongchoy and Koh Boon Hwee.

Disclaimer: This blog is exclusively for educational purposes and does not provide any advice/tips on investment or recommend buying and selling any stock.