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The IPO of real- estate inventor Shriram Properties, a part of Shriram Group, will open for subscription moment (December 8), and it’ll conclude on December 10. The price band for the IPO has been fixed at Rs 113-118 per share. The issue comprises fresh allocation of equity shares worth up to Rs 250 crore, and an offer for trade (OFS) of Rs 350 crore. The establishment has reduced its OFS size from Rs 550 crore earlier. The company has raised a little over Rs 268 crore from anchor investors ahead of its IPO.
Issue lot size and investor’s reticent portion
Investors can bid for a minimum of 125 equity shares and in multiples of 125 equity shares later. Retail investors can invest a minimum of Rs for one lot, and their maximum investment would be Rs for 13 lots. Retail investors are allowed to invest up to Rs 2 lakh in an IPO. The share allotment will be finalised by December 15; unprofitable investors will get refunds in their bank accounts on or after 16, while successful investors will get shares in their demat accounts by December 17.
Shriram Parcels IPO Grey Market Premium
Ahead of IPO opening, Shriram Properties shares were trading at Rs 20 decoration in the slate request, over issue price of Rs 118 (upper end), according to IPOWatch.
Financials
The company posted a loss of Rs 60 crore on earnings of Rs118.2 crore in the six-month period ended September 2021. In the fiscal time ended March 2021, it reported a loss of Rs68.2 crore against loss of Rs86.4 crore in the former time. Profit from operations dropped from Rs571.96 crore to Rs431.5 crore during the same period.
Crucial Pitfalls
The price type of Rs 113-118 per share values the company at Rs crore at the top end of the type, which could be a big threat for investors as maturity of the issue is from the OFS portion Issue aggressively priced compared to peers INDmoney Shriram Properties’ total earnings fell 21 on- time to Rs 501 crore in FY21, impacted by the ongoing epidemic. Due to COVID-19 epidemic, construction exertion had been stalled during the time. The company has also posted losses in the last 2 times. Due to its negative earnings, it isn’t possible to value the company on a PE rate base. At the advanced end of the price band, Shriram Properties IPO is priced at a Price to Book Value of
2.29 times (Apr-Sep 21). This seems to be in- line with listed peer Prestige Estates (2.61 times), but lower than Oberoi Realty (3.10 times), DLF (2.63 times), Sobha (3.25 times), Godrej Properties (6.51 times). When compared on an EV/ EBITDA base, Shriram Properties seems to be aggressively priced as compared to peers, due to lower earnings in the former times. Specially, Prestige, Sobha and Oberai have advanced return rates than Shriram Properties. Given a drop in earnings, negative earnings, uncertain outlook due to the ongoing epidemic, and high valuations, we remain “ Neutral” on the prospects of the issue.
Choice Broking Assigning a “ Subscribe” standing for the issue, Choice Broking in its IPO note said “ SPL is one of the leading domestic real estate development companies in South India, primarily fastening on themid-market and affordable casing orders. It’s a part of the Shriram Group, which is a prominent business group with four decades of operating history in India and a well- honored brand in the retail fiscal services sector and several other diligence. Association with the Group benefits the company from the trust and confidence that homebuyers, lenders, fiscal investors, coproprietors, development mates, contractors and other stakeholders have on the Shriram brand.”
“ SPL is well supported by marquee private equity investors like TPG, Tata Openings Fund, Walton Street Capital and Starwood, which cumulatively held58.35 equity stake. Through this IPO, these investors are incompletely unpacking their stake. The company has also attracted multiple fiscal investment (from investors like SUN Apollo India Real Estate Fund I LLC, Mitsubishi Corporation, Amplus Capital Counsels, ASK Real Estate Special Openings Fund, India Realty Excellence Fund II LLP managed by Motilal Oswal and Kotak Affordable India Fund) in its systems,” it added.
Plutocrat raised to be used to pay off debt
The plutocrat raised through the IPO will be used to pay off the debt. From the net fresh issue proceeds, Rs 200 crore will be employed for the prepayment/ repayment of certain borrowings profited by the company. Axis CapitalLtd., ICICI SecuritiesLtd. and Nomura Financial Advisory and Securities (India)Pvt. Ltd are the lead book running directors to the Shriram Parcels IPO. KFinTech Ltd is the register of the issue. Post-listing, Shriram Properties will get itself added to the list of other listed real estate inventors like Sobha, Prestige Estate Systems, Brigade Enterprises, Godrej Properties, Oberoi Realty and Sunteck Realty.
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