Why Indiabulls Real Estate shares jumped 27 per cent

Shares of Indiabulls Real Estate on Monday surged almost 27 per cent in BSE, its Friday's closing price was Rs 42.05 and touched Rs 53.40 in intraday trading, this article contains the reasons of sudden rise in the price of Indiabulls Real Estate.

As per the meeting held on 20th June 2015, Board of the Directors of the Indiabulls Real Estate has approved, the preferential offer of 3.67 crore equity shares and 4.36 crore warrants, which is convertible into equivalent number of equity shares of having face value of Rs 2 each. It is to be invested by the promoter group of entities at an conversion price of Rs 67 per share, it will increase its promoter stake by almost 10 per cent.  The conversion price of Rs 67 is at a premium of above 59 per cent on Fridays’s closing market price of Rs 42.05 at BSE. The total equity investments by the promoters would be at around Rs 538 crore in the Company, after the conversion of warrants at the conversion price.

Indiabulls Real Estate has also informed BSE that the approval is in relation to augment the long-term resources of the Company for meeting funding requirements for its business purposes and as a reflection of confidence that the promoters have in the future of the Company. But the proposal is subject to the approval of the other shareholders of the Company, in Extraordinary General Meeting, which will be held on 20th July 2015.

As per the media reports it is cleared that the amount of Rs 538 crore will be invested by Sameer Gehlaut, who is co-founder and chairman of the Indiabulls Group. Sameer Gehlaut controls the flagship companies of the group which includes, Indiabulls Housing Finance, Indiabulls Real Estate, Indiabulls Securities and Indiabulls Wholesale Services. The amount of Rs 538 crore will be used to clear the debt of the company which was increased about Rs 2050 crore, due to the acquisition of the 22 Hanover Square property in central London and around eight acres of land in Thane last year.

This financial year is very critical for the company as the company will begin handing over homes in Centrum Park, which is located in Gurgaon and Indiabulls City located in Sonepat. Company also plans to deliver Mega Mall in Vadodara. In the latter part of the year, part-delivery of its large township project at Panvel in Navi Mumbai is scheduled. The company has not yet announced any new projests this year; it means that company is focusing on projects in hand.