Shriram Properties IPO Subscription
On the second day of bidding, December 9, Shriram Properties’ initial public offering had 1.02 times subscription, with bids for 3.24 crore share capital versus a size of offer of around 3 crore share capital.
The offer of a south-based real estate developer continues to get great support, with retail investors purchasing 6.04 times the percentage set out for them.
Employees’ reserved portion was 46 percent subscribed, and non-institutional investors’ portion was 4 percent subscribed, while eligible institutional purchasers have yet to submit bids in the offer.
Shriram Properties IPO Details
Shriram Properties, a subsidiary of the Shriram Group, plans to raise Rs 600 crore through its public offering at the higher price band, with Rs 268.65 crore already raised through the anchor book. The offer consists of a Rs 250 crore new issue and a Rs 350 crore offer-for-sale by selling shareholders. The net proceeds from the new issue will be used to satisfy the company’s debts.
The IPO, which ends on December 10, has a price range of Rs 113-118 per equity share. In terms of valuation, the Issue is available at a price-to-book value of 2.09 for FY21 on its upper price band. Long-term investors should be cautious due to its net debt to equity ratio of 0.80x as of H1FY22. Experts recommend subscribing for listing gains.
In terms of the number of units released between 2012 and the third quarter of 2021 throughout Tier 1 cities like Bengaluru, Chennai, and Hyderabad, Shriram Properties is among the top five residential real estate businesses in South India for the mid and cheap housing market.
Bengaluru and Chennai are the two most important markets in India, accounting for 29.3 percent of total launches between 2012 and the third quarter of 2021. The corporation has 197 acres of property with a construction capacity of around 21 million square feet of speculative expandable area.
What are Shriram Properties Limited’s advantages?
- They are a part of the well-known Shriram Group.
- It is one of South India’s leading residential real estate development firms.
- It has a track record of identifying and executing projects.
- It has solid strategic partnerships with financial backers.
- A business model that is scalable and asset-light.
- Well-positioned to take advantage of regulatory and industry changes
- The management team is experienced and professional.
Risks of Investing in Shriram Properties’ Initial Public Offering
- The performance of the Indian real estate market, particularly in South India, has a substantial impact on the company’s revenue and profitability. Any changes in market conditions may have an adverse impact on its ability to sell its projects at the projected price, as well as its revenues and profitability.
- The extent to which a pandemic will affect its operations in the future is unknown and impossible to predict.
- Its operations are focused in a few key cities in South India. Economic risks, political concerns, and regulatory changes in these regions can all have an impact on a company’s operations.
- The company is heavily in debt, which may limit its capacity to get additional funding or execute its expansion strategy.
- The Company and several of its subsidiaries have unsecured loans that could be repaid at any time by the lenders.
- Before participating in this IPO, investors should read all of the risk considerations listed in the RHP of the IPO document.
Frequently Asked Questions (FAQs)
What is the minimum subscription amount for this IPO?
Applicants must apply for 125 shares at the lowest price band of Rs 113 per share. In this situation, the minimum amount would be 125 x 113 = Rs 14,125. Similarly, the lower pricing band’s minimum amount would be Rs 125 x 118 = Rs 14,750.
How many projects have Shriram Properties done and how many are currently being worked on?
As of September 30th, the company had completed 29 projects totalling 16.7 million square feet of scalable space. In Bengaluru and Chennai, 24 projects have been completed, accounting for 90% of the scalable area. Furthermore, 35 projects are now under construction, totalling 46.7 million square feet of projected saleable area, primarily in Bengaluru, Kolkata, and Chennai.