Shriram Properties IPO: South India-based real estate firm Shriram Properties Limited is set to float its initial pubic offering, or IPO, on December 8, Wednesday. The bidding process will be open for three days and will close on December 8, Friday, the company has said. Shriram Properties, headquartered in Bengaluru, is looking to raise around Rs 600 crore during its IPO. The Shriram Properties IPO has a price band of Rs 113 to Rs 118 per equity share with a face value of Rs 10 each. The firm, which mainly has its focus on the mid-market and affordable housing segments, south India in terms of the number of units launched between the CY12 and the Q3CY21 across Tier 1 cities of the region.
Shriram Properties IPO Key Details
The offer comprises of a fresh issue worth Rs 250 crore and an offer for sale by existing shareholders worth Rs 350 crore. At the upper end of the price band, the company plans to mop up Rs 600 crore through the issue.
Shriram Properties has 75 per cent of the issue reserved for qualified institutional buyers (QIBs), 15 per cent for non-institutional investors (NIIs) and 10 per cent for retail investors. The lot size of the Shriram Properties IPO is 125 equity shares. Investors can bid in multiples of 125 shares thereafter. One lot of the Shriram Properties IPO will cost Rs 14,750 at the upper end of the price band.
Objectives of Issue
The company will use the proceeds from the fresh issue for repayment and/ or pre-payment, in full or part, of certain borrowings availed by it and its subsidiaries. The fund will also be used for general corporate purposes. The company will not receive any proceeds from the OFS part of the issue.
Shriram Properties Limited IPO GMP Today
As per the different market reports grey market premium (GMP) is fluctuating between Rs 20 to Rs 25 since the announcement of the IPO. On December 8, the Shriram Property shares were fetching a premium of Rs 20 at the grey market. This was around 17 per cent of the value on the upper end of the price band of Rs 118. The grey market premium often indicates how an IPO will perform during its listing at the stock markets.
Shriram Properties IPO Key Risks
According to Choice Broking, Shriram Properties Limited, though supported by marquee investors, is subject to unfavourable government policies and regulations and does not have a good movement in terms of interest rates. The real estate industry also faces continued risk from the Covid-19 pandemic, which affects the company as well. Shriram Properties Limited typically posts delay in project execution and has a slower expansion of the development management. Being in the real estate sector, the company also faces much competition. Shriram Properties Limited has also sustained a higher cost of construction.
Should You Subscribe?
Religare Broking: We are constructive on the company’s long term growth prospects given the current positive industry growth trends and Shriram’s strong brand presence and execution track record. However, improvement in financials would remain a key monitorable for the company.
Choice Broking: SPL is among the leading residential real estate development companies in South India, with presence in key South India markets of Bengaluru and Chennai. These two cities are among the two key residential housing markets in India and will continue to be among the top cities in terms of growth. SPL’s business was severely impacted during the second wave of the pandemic and thus is likely to perform relatively better in the coming quarters. The company is backed by marquee investors and also have financial investors in its projects. At higher price band of Rs. 118, SPL is demanding a P/B multiple of 1.8x, which is at significant discount to the peer average of 4.6x. Thus considering the above observations, we assign a “SUBSCRIBE” rating for the issue.