Shriram Properties IPO: South India based real estate firm Shriram Properties Limited is all set to bring its initial public offering or IPO on Wednesday, December 8. The bidding process will remain open for three days and will close on Friday, December 8, the company has said. Bengaluru-headquartered Shriram Properties is planning to raise around Rs 600 crore during its IPO. Shriram Properties IPO The price band is Rs 113 to Rs 118 per equity share with a face value of Rs 10. The firm, which primarily focuses on the mid-market and affordable housing segment, South India, in terms of the number of units launched between CY12 and Q3CY21 in Tier 1 cities of the region.
Shriram Properties IPO key details
The offer includes a fresh issue of Rs 250 crore and an offer for sale of Rs 350 crore by existing shareholders. At the upper end of the price band, the company plans to raise Rs 600 crore through the issue.
Shriram Properties’ 75 per cent of the issue is 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 Shriram Properties IPO is 125 equity shares. Thereafter, investors can bid in multiples of 125 shares. The price of one lot of Shriram Properties IPO will be in the upper end of the Rs 14,750 price band.
Objectives of the issue
The Company shall use the proceeds of the fresh issue for full or partial repayment and/or prepayment of certain borrowings taken by it and its subsidiaries. The fund will also be used for general corporate purposes. The Company will not receive any income from the OFS portion of the issue.
Shriram Properties Limited IPO GMP Today
According to various market reports, the Gray Market Premium (GMP) has been fluctuating between Rs 20 and Rs 25 since the announcement of the IPO. On December 8, the shares of Shriram Property were fetching a premium of Rs 20 in the gray market. It was around 17 per cent of the price at the upper end of the Rs 118 price band. The gray market premium often indicates how an IPO will perform when listed on the stock exchanges.
Shriram Properties IPO Key Risks
According to Choice Broking, Shriram Properties Limited, though backed by marquee investors, is subject to unfavorable government policies and regulations and not a good movement in terms of interest rates. The real estate industry is also facing continued risks from the COVID-19 pandemic, which affects the company as well. Shriram Properties Limited usually delays project execution and slow expansion of development management. Being in the real estate sector, the company also faces a lot of competition. Shriram Properties Limited has also sustained the high cost of construction.
Should you subscribe?
Religare Broking: We remain constructive on the company’s long-term growth prospects given current positive industry growth trends and Shriram’s strong brand presence and execution track record. However, improvement in financial position will remain a major watchdog for the company.
Choice Broking: SPL is one of the leading residential real estate development companies in South India with presence in major South India Bangalore and Chennai markets. These two cities are among the two major residential housing markets in India and will continue to be among the top cities in terms of growth. SPL’s business was badly hit during the second wave of the pandemic and thus is expected to perform relatively better in the coming quarters. The company is supported by marquee investors and also has financial investors in its projects. On the higher price band of Rs. 118, SPL is seeking a P/B multiplier of 1.8x, which is at a significant discount to the peer average of 4.6x. Thus considering the comments above, we assign a “Subscribe” rating to this issue.
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