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Shariah Stock Status Report
:: Mindspace Business Parks REIT::
INDIA :: NSE :: BSE :: 23rd July 2020
September 24, 2021
Mindspace Business Parks REIT:: INDIA :: NSE :: BSE :: 23rd July 2020 Source: blog.islamicly.com
TICKER | TBA on Listing |
---|---|
Company Name | Mindspace Business Parks REIT (IPO) |
Shariah Compliance | NOT COMPLIANT |
DP RATIO | 27.10 % |
Business sector screening:
Mindspace Business Parks REIT is an entity jointly backed by private equity major Blackstone Group and realty developer K Raheja Corp.
The Company’s portfolio as on 31st March 2020 includes a total leasable area of 29.5 million square feet with 10 Office Assets and 170+ tenants. The company's property portfolio essentially comprises of five integrated business parks and five quality independent offices in Mumbai Region, Hyderabad, Pune and Chennai.
The tricky areas from a Shariah perspective for a REIT:
The revenue derived from non-permissible tenants needs to be reviewed:
Review the tenant portfolio for:
- Conventional Financial services providers such as banks/Insurance companies. Even thier in-house backend processing is considered non-compliant
- Entertainment venues such as theaters and Cinemas
- Casinos
- Hotels and resorts serving alcohol, pork, tobacco products as well as for housing night clubs.
- Restaurants/Bars/clubs selling alcohol, pork and tobacco
- Retail stores/supermarkets selling alcohol, pork, tobacco, music
MINDSPACE Business Parks REIT Tenant portfolio:
The company's portfolio consist of only office buildings. Hence, tenant profile of the same needs to be analyzed.
The company states that its largest tenants include affiliates of Accenture, Qualcomm, BA Continuum, JP Morgan, Amazon, Schlumberger, UBS, Capgemini, Facebook, Barclays and BNY Mellon.
The ten largest tenants contributed 41% of total revenue and no single tenant contributed more than 8.7% of total revenue.
The company states that tenants from Financial Services sector contribute 18.8% of its Gross contracted rentals and occupies 16.8% of its leased area as on 30th June 2019.
Mindspace Business Parks REIT Prospectus further elaborates that companies from the conventional financial services sector like Bank of America Continuum, JP Morgan, and UBS contribute 3.3%, 3.3% and 2.5% of Gross Contracted Rentals respectively as of 30th June 2019.
These three named conventional financial services sector tenants contribute 8.8% revenue for Mindspace Business Parks REIT
Let's analyze the revenue streams of Mindspace Business Parks REIT to ascertain its business sector compliance from a Shariah perspective
Segment break up
Operating Revenue in Millions of INR for Year ended 3oth June 2019
Segment Description | Segment Revenue | Non-permissible Revenue | % non-permissible revenue | Non - permissible segment classification |
---|---|---|---|---|
Facility rentals | ₹ 2,883 | ₹ 542 | 18.80% | Revenue from Conventional Financial services tenants |
Maintenance services income | ₹ 727 | |||
Revenue from power supply | ₹ 117 | |||
Other operating income | ₹ 32 | |||
TOTAL | ₹ 3,759 | ₹ 542 | 14.42% |
Total Revenue | ₹ 3,759 |
---|---|
Non-permissible Operating revenue | ₹ 542 |
% of non permissible revenue | 14.42% |
Since the revenue from non-permissible operating income of the company is more than 5%, Mindspace Business Parks REIT FAILS the BUSINESS SECTOR Screening
Sector Compliance | FAIL |
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Non-operating Revenue in Millions of INR for year ended 30th June 2019 - Other Income
Segment Description | Segment Revenue | Non-permissible Revenue | % non-permissible revenue | Non - permissible segment classification |
---|---|---|---|---|
Other income (including interest income) | ₹ 654 | ₹ 654 | 100% | Interest Income |
TOTAL | ₹ 654 | ₹ 654 |
Dividend Purification calculation
Revenue Description | Non permissible Revenue (millions of INR) |
---|---|
Non-permissible operating revenue | ₹ 542 |
Non-permissible non-operating revenue | ₹ 654 |
Total Non-permissible revenue | ₹ 1,196 |
Total Revenue of the Company (Gross) | ₹ 4,413 |
Dividend purification ratio | 27.10% |
"This will not be displayed in Islamicly as the sector of the company is non-compliant i.e. investment in this stock is not permissible hence dividend purification would not be applicable"
Financial Ratio Screen:
(All figures in millions of INR as on 30th June 2019)
Particulars | Amount | Remarks |
---|---|---|
Estimated market value based on issue price band | ₹ 2,36,750 | This is estimated by considering the total outstanding shares with the higher band of the issue price. Upon listing, please check the current compliance of the stock on Islamicly |
Total Debt | ₹ 62,432 | |
Islamic Debts | ||
Adjusted Debts | ₹ 62,432 | |
Debt Ratio | 26% | - Within limits |
Cash | ₹ 502 | |
Cash Ratio | 0.21% | - Within limits |
Accounts Receivables | ₹ 28,695 | |
Accounts Receivables Ratio | 12% | Within limits |
Since all the Ratios are within the limit, the stock passes the Financial ratios screen
Financial Ratio compliance | PASS |
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Source:
All the above information is based on the website of the company and Annual financial report for June 2020.
Conclusion:
Given the above information, we believe Mindspace Business Parks REIT (IPO) is a Shariah NOT COMPLIANT company company as per the Shariah screening Criteria.
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