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.
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|
|Employee Discount||Rs.11 Per Share|
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)|
|Profit After Tax||487.9||-863.9||-681.8||-600.3|
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
|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|
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.
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