On December 8, Shriram Properties Limited will conduct a Rs 600-crore public offering. The deadline for subscriptions is December 10th. According to the number of units released between 2012 and the third quarter of 2021 across Tier 1 cities in the region, including Chennai, Hyderabad, and Bengaluru, the company is among the top five residential real-estate companies in South India.
Shriram Properties, which is part of the Shriram Group, which includes publicly traded companies such as Shriram City Union Finance and Shriram Transport Finance, concentrates on the mid-market and affordable housing segments.
The shares in this Rs 600-crore public offering would be priced between Rs 113 and Rs 118 per share, with a face value of Rs 10. The IPO includes Rs 250 crore in new issues and a Rs 350 crore offer-for-sale by the company’s various investors.
Qualified institutional buyers will receive up to 75% of the issuance, while non-institutional investors would receive 15% and regular investors will receive 10%. The promoters’ present stake is 31.98 percent, which will drop to 27.98 percent after the issue.
The lot size will be 125 shares, with a minimum investment of Rs 14,750 for one lot and a maximum investment of Rs 1,91,750 for 13 lots for retail investors. By December 15, the share allotment will be completed, and unsuccessful bidders will receive reimbursements in their bank accounts by December 16. By December 17, the successful bidders will get their shares in their demat accounts. The BSE and NSE will begin trading in the company’s shares on December 20.
Given that the company has lost money for the past two years and has a considerable amount of debt on its books, brokerages have conflicting opinions on the IPO. In comparison to peers, its valuations are likewise high. However, the company’s strong brand presence, particularly in South India, and long-term development possibilities, given the industry’s present positive trends, are positives.
According to brokerages, the corporation has been losing money for the past two years, and income has dropped dramatically from 2019 levels. Because of the Omicron problem, the losses may worsen this year. Residential real estate demand is increasing across the country, and South India, where the company has a significant presence, has played a key role in this rebound.
Omicron, unfavourable interest rate movement, delays in project execution, continued increasing construction costs, and competition, according to an expert, are all threats to the company. “However, basic reasons such as historically low home loan interest rates, stagnating residential prices, and stamp duty reductions in certain regions are particularly favourable for the inexpensive residential real estate market, which is the company’s principal area of activity,” the expert continued.
As of September 30, 2021, Shriram Properties, which was founded in the year 2000, had 29 completed projects totalling 16.76 million square feet of saleable space. 90.6 percent of its saleable area is in Bengaluru and Chennai. It has a total portfolio of 35 projects – existing, under development, and upcoming – totaling 46.72 million square feet of the estimated saleable area as of September 2021. It also contains 197.47 acres of land reserves, with a development potential of about 21.45 million square feet of projected saleable area. The company is shifting from a real-estate development model to a hybrid model that combines real-estate development and real-estate services and favors an asset-light strategy.
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