Shriram Properties IPO – 360 Degree Review and Analysis

Shriram Properties IPO (Shriram Properties Limited IPO) Details

Chennai based Shriram Properties Limited is coming up with an IPO that would open for subscription on 8th December 2021. Shriram Properties is one of the leading residential real estate development companies in South India. Its revenues fallen by more than 30% in the last 3 years. It has been incurring losses in the last 2.5 years. Should you invest in Shriram Properties IPO? This article would provide IPO details, Dates, GMP, Listing Date and conclusion on whether it is good or bad for investment.

Also Read: RateGain IPO Opens on 7th December – Is this good or bad for investment?

About Shriram Properties Limited

Company is one of the leading residential real estate development companies in South India. It primarily focused on the mid-market and affordable housing categories.

They are among the top 5 residential real estate companies in South India in terms of number of units launched between 2012 and 3rd quarter of 2012 across Tier-1 cities of South India including Bengaluru, Chennai and Hyderabad.

Company is part of the Shriram Group, which is a prominent business group with four decades of operating history in India and a well-recognized brand in the retail financial services sector and several other industries.

It believes that its relationship with the Shriram Group provides them with strong brand recall and that they benefit, and will continue to benefit, from the trust and confidence that homebuyers, lenders, financial investors, landowners, development partners, contractors and other stakeholders place in the Shriram brand and its operational history.

Shriram Properties IPO details and Price

IPO Opening Date 08-Dec-21
IPO Closing Date 10-Dec-21
Issue Type Book Built Issue IPO
Face Value Rs 10 per equity share
IPO Price band Rs 113 to Rs 118 per equity share
Lot Size 125 Shares
Min Order Quantity 125 Shares
Listing at BSE and NSE
Total Issue Size Rs.600 Crores
    Fresh issue     Rs.250 Crores
   OFS     Rs.350 Crores
Employee Discount Rs.11 Per Share

Shriram Properties IPO RHP

What are the strengths of Shriram Properties Limited?

1) They part of reputed Shriram Group

2) It is one of the leading residential real estate development companies in South India

3) It has proven capabilities in project identification and execution

4) It has strong strategic relationships with financial investors

5) Company with scalable and asset-light business model

6) Well-positioned to benefit from regulatory and industry developments

7) The experienced and professional management team

What are the Objects of the IPO Offer?

Shriram Properties IPO Size is Rs 600 Crores and below are the objects of the IPO:

1) Offer for Sale (OFS) Rs 350 Crores:  Under OFS, selling shareholders would sell their shares and company would not get any money from this IPO proceeds.

2) Fresh issue of Rs 250 Crores:  Fresh issue would be done towards the following purposes:

Repayment and/or pre-payment, in full or part, of certain borrowings availed by the company and its subsidiaries, Shriprop Structures, Global Entropolis and Bengal Shriram; and

General corporate purposes, subject to applicable laws.

Who is the promoter of Shriram Properties Limited?

Murali, Shriram Properties Holdings Private Limited and Shriram Group Executives Welfare Trust are the promoters of the company.

How is the company financial track record?

Here are the total assets, revenues and profits of the company in the last 3 years and 6 months.

Financial Year ending / Period ending (Amt in Mns)
Particulars FY19 FY20 FY21 Sep-21
Total Assets 33,656.3 34,173.0 32,994.9 32,933.6
Revenues 7,237.8 6,318.4 5,013.1 1,551.5
Profit After Tax 487.9 -863.9 -681.8 -600.3
Profit % 6.74% -13.67% -13.60% -38.69%

Why to invest in Shriram Properties IPO?

Here are the positive factors in this company.

1) Company is the leading residential real estate companies in South India.

2) Company is part of Shriram Group which has good brand value.

3) The company has strong, proven capabilities in the identification and execution of projects.

Risk Factors of investing in Shriram Properties IPO

1) Company revenues are on declining mode. Its revenues for FY19, FY20 and FY21 are Rs 723.7 Crores, Rs 631.8 Crores, Rs 501.3 Crores respectively.

2) The company has incurred losses in the last 2.5 years. It generated a profit of Rs 48.7 Crores in FY19, however incurred losses of Rs 86.3 Crores in FY20, loss of Rs 68.1 Crores in FY21 and loss of Rs 60 Crores for 6 months ending Sep-21. Investors should always invest in profit making companies unless they see a major turnaround in coming years.

3) Company business and profitability is significantly dependent on the performance of the real estate market in India, specifically South India. Any fluctuations in market conditions may affect its ability to sell its projects at the expected price, may adversely impact its revenues and earnings.

4) The extend Covid-19 may affect its business in the future is uncertain and cannot be predicted.

5) Its business is concentrated in key cities in South India. Any economic risks, political risks, regulatory changes in these regions can affect company business.

6) Company has a significant amount of debt which could affect its ability to obtain future financing or pursue its growth strategy.

7) Company and some of its Subsidiaries have unsecured loans that may be recalled by the lenders at any time.

8) Investors should read complete risk factors indicated in the RHP of the IPO document before investing in this IPO.

Frequently Asked Questions (FAQs)

What is Shriram Properties IPO Rating?

Company do not require to get IPO rating. However, it has a credit rating of BBB+/Stable from CARE Ratings. Instruments with this rating are considered to have a moderate degree of safety regarding timely servicing of financial obligations. Such instruments carry moderate credit risk.

What is the minimum amount to subscribe to this IPO?

Investors need to apply for 125 shares at minimum lower price band of Rs 113 per share. Minimum amount in such case would be 125 x 113 = Rs 14,125. Similarly minimum amount to be applied on upper price band would be Rs 125 x 118 = Rs 14,750.

How many projects did Shriram Properties completed and how many are ongoing?

Company has completed 29 projects as of 30-Sep-21 representing 16.7mn square feet of scalable area. Out of which 24 projects are completed in Bengaluru and Chennai which accounts for 90% of scalable area. Further, there are 35 projects which are ongoing representing 46.7 mn square feet estimated saleble area which are majorly in Bengaluru, Kolkata and Chennai.

Is it good or bad for investment?

Investors should always invest in fundamentally strong companies along with reasonable IPO price. Shriram Properties revenues are declining in the last 3.5 years. It moved from profit making (FY19) to loss making company (FY20, FY21 and 6 months ended Sep-21).

What is Shriram Properties IPO GMP today?

GMP is nothing but the premium at which the shares are trading in offline market. This is just an indication about the IPO price as it is unorganized market.

Shriram Properties IPO GMP today (Source: Chittorgarh) is at Rs 25 as of the date of writing the article.

Shriram Properties Limited IPO Valuation

The Shriram Properties IPO price band is Rs 113 to Rs 118 per share.

Company is incurring losses and the EPS is negative in the last 3 years (weighted average) and in FY21, hence we cannot compute the P/E and cannot ascertain whether the issue price is underpriced or overpriced compared to peers.

Shriram Properties IPO dates for subscription, Allotment and Listing

Offer Open 08-Dec-21
Offer close 10-Dec-21
Finalization of Allotment 15-Dec-21
Initiation of Refunds 16-Dec-21
Credit to Demat Account 17-Dec-21
IPO Shares Listing Date 20-Dec-21

Also Read: IIFL Home Finance NCD Dec-21 issue offers up to 8.75% interest rates – Should you buy?

Shriram Properties IPO Review and Analysis

You might be wondering this IPO is good or bad for investment?

Shriram Properties Limited is part of Shriram group and is one of the leading residential real estate companies in South India.

Company revenues are on declining mode in the last 3.5 years.

It has been incurring losses in the last 2.5 years.

Considering these pros and cons indicated above, investors can stay away from this IPO as of now.

Did you like our IPO Analysis, then share it with your friends on WhatsApp, FB, Twitter and Telegram?

Suresh KP

6 comments

  • Ravichandran Srinivasan

    Hi Suresh ,
    Greetings!
    I read most of your analysis on the forthcoming IPO’s & other investments.

    So many companies are coming out with IPO’s & many new investors like me in the stock market get influenced based on the analysis by different agencies like you .

    However I am not too sure, how many companies will survive in a cycle of 3 years .

    For eg , Paytm stocks were over valued and as of date I have lost few thousands . I am holding it as of now .

    Please advise which are the best stocks to buy in the secondary market which can give sustained returns over a 3 years cycle .

    Best regards

    • Please wait for few more days as stock markets are correcting. Based on price valuations, one can pick some of the blue chip stocks

    • Prakash

      Hi Srinivasan,

      Among most of the sites, this site gives most objective analysis and it is investor’s choice to take call. Regarding PAYTM, Suresh ji had done clear analysis and that gives the clue for its overvaluation. There are so many advisers in the market and most of them are influenced and that is evident from paytm story.

    • Tom

      true,but Suresh clearly advised against investing in this IPO ! and like you,I too applied hoping there will be some listing gain,but alas ! so lets lick our wounds & not cry over it !

  • Charlie

    Hi Suresh,

    Good analysis, as usual. Just one feedback: I believe you have a regular set of users who follow your analysis and I am sure the set of users have increased over time with word of mouth publicity. So, you don’t need to add fancy titles like 360 degree review which doesn’t have any meaning in my view. Even if it has, it indicates your earlier reviews were not thorough which I don’t think was the case. In my opinion, your USP is your detailed analysis presented in a simple way and you should stick to that.

    I understand if you have don’t agree and respect that.

    Thanks!

    • Thanks for the feedback Charlie. Readers don’t like same set of repeated titles and get bored over a period of time. Same way even Google. Hence we are creating different title to give similar meaning for our reviews and analysis.

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