Rakesh Jhunjhunwala's multibagger real estate stock: Taking the right steps toward debt-free status by November 30; keep a close eye!

This strategic financial move is poised to render the company entirely debt-free on a standalone basis by or before November 30, 2023

Breaking free from the sideways movement that characterized much of November, Nifty surged beyond the pivotal 19,875 level on Tuesday on intra-day basis, marking a notable upswing. In a month where Nifty has climbed by 4 per cent, the star performer has undoubtedly been the Nifty Realty Sector, boasting a remarkable 17 per cent surge—a feat that outshines the benchmark index.

Amidst the sector's stellar performance, attention has gravitated towards DB Realty Ltd., a company recently in the spotlight due to its association with the late Shri Rakesh Jhunjhunwala's wife. In a captivating turn of events, the Promoter Group has successfully divested 1.46 crore shares, equating to a 2.91 per cent stake in the company, raking in an impressive Rs 301 crore from the sale. Intriguingly, a significant chunk of the proceeds has been reinvested by the promoters into the company, facilitating the repayment of related party transactions and an unsecured, interest-free loan. This strategic financial move is poised to render the company entirely debt-free on a standalone basis by or before November 30, 2023.

DB Realty Ltd.'s journey towards debt freedom commenced approximately three years ago when the company grappled with a standalone debt of Rs 1,373 crore and a consolidated debt of Rs 3,140 crore as of September 30, 2021. Since then, the company has steadfastly pursued a singular objective—eliminating its debt burden—utilizing asset monetization and joint ventures as key avenues to realize this ambition.

In an additional bold move, the company executed a significant decoupling initiative with the promoter group, fully divesting from past investments totaling Rs. 1500 crore in various promoter group entities. This strategic maneuver not only recovered the entirety of preferential investments but also unlocked substantial cash flow for the company. This newfound financial flexibility allowed DB Realty Ltd. to secure a 100 per cent stake in the Grand Hyatt Goa, a 75 per cent stake in the Hilton Mumbai, and a 50 per cent stake in the upcoming Marriott Marquis Hotel & Convention Centre, St. Regis, Aerocity & Prestige Trade Centre at Delhi—marking a strategic foray into the flourishing hospitality business.

The market has duly rewarded these transformative endeavors, with the stock delivering an impressive multibagger return of 110 per cent over the past year. Notably, Rekha Rakesh Jhunjhunwala and Rare Investment both hold a 1.99 per cent stake in the company, each.

Disclaimer: The article is for informational purposes only and not investment advice.