Shriram Properties Limited IPO - Swastika Blog Swastika

Shriram Properties Limited IPO

 

Rating
SUSBCRIBE  

(Only Aggressive Investors)

 

Issue Offer
Issue Opens on  Dec 08, 2021
Issue Close on  Dec 10, 2021
Total IPO size (cr)  600
Fresh issue  250
Offer For Sale (cr)  350
Price Band (INR)  113-118
Market Lot  125
Face Value (INR)  10
Retail Allocation  10%
Listing On  NSE, BSE

 

Objects of the issue 

For repayment of borrowings. 

For general corporate purposes.

 

Issue Break-up (%)
QIB Portion  75
NIB Portion  15
Retail Portion  10

 

Shareholding (No. of Shares)
Pre Issue  148,411,448
Post Issue  169,597,889

 

Indicative Timetable
Finalisation of Basis of Allotment  15-12-2021
Refunds/Unblocking ASBA Fund  16-12-2021
Credit of equity shares to DP A/c  17-12-2021
Trading commences  20-12-2021

 

Incorporated in 2000, Shriram Properties is a part of the Shriram Group and is one of the leading residential real estate development companies in South India.

The company primarily focuses on the mid-market and affordable housing segments. The company is also present in the mid-market premium and luxury housing categories as well as commercial and office space categories.

Bengaluru and Chennai are the key markets for the company. The company also has operations in Coimbatore,  Visakhapatnam, and Kolkata.

It is among the top five residential real estate companies in South  India in terms of the number of units launched between the calendar  years 2012 and the third quarter of 2021 across Tier 1 cities of  South India including Bengaluru, Chennai and Hyderabad 

It is a 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. 

⮚ The company has been focused on the mid-market and affordable housing categories as its target segment within the residential housing market.

The mid-market and affordable housing categories have accounted for a significant share of overall market absorption in India in recent years.

According to the JLL Report, these housing categories accounted for 75.00%, 72.00% and 74.00% of overall residential unit absorption during calendar years 2018, 2019 and  2020, respectively. 

As of September 30, 2021, it has a total portfolio of 35 projects in  Ongoing Projects, Projects under Development and Forthcoming  Projects aggregating to 46.72 million square feet of estimated  Saleable Area. 

Outlook & Company Valuation:

The company’s financials have been on a weaker note where revenues of the company are declining while the company turned loss-making since FY20. The company’s revenues in FY19 were  Rs. 723 cr, which fell to Rs 501 cr in FY21, while it made a profit of Rs  48 cr in FY19 and a loss of Rs 67 cr in FY21.

Despite strong brand recognition, the company has suffered losses during the COVID, when real estate and housing were booming. Being a loss-making company retail portion is 10%.

The SME IPO is arriving at a P/BV of 2.09x while the industry average is 3.69x which might attract minor listing gain.

 However, we believe that there are many reputable listed companies such as Sobha, Brigade, Prestige, etc., and only “AGGRESSIVE  INVESTORS” should apply for the IPO.

www.swastika.co.in 

For additional information & risk factors please refer to the Red Herring Prospectus 

IPO Note 

SHRIRAM PROPERTIES LIMITED 

KEY MANAGERIAL PERSONNEL  

M. Murali is the Chairman and Managing Director and individual Promoter of the Company. He has over 17  years of work experience with this Company and was first appointed as a Director on March 30, 2003.

S. Natarajan is a Non-Executive Director of the Company.

He is a member of the Institute of Chartered  Accountants of India since 1975. He has been associated with the Shriram group for over 17 years and has been a Director of the Company since March 30, 2003. 

Raphael Dawson is a Non-Executive Nominee Director of the Company. He has more than 15 years of work experience. 

Gautham Radhakrishnan is a Non-Executive Nominee Director of the Company. His career has been exclusively in private equity and corporate finance. 

T.S. Vijayan is an Independent Director of the Company. He has many years of experience in the insurance sector and was formerly the Chairman of the Life Insurance Corporation of India. 

K.G. Krishnamurthy is an Independent Director of the Company. He has over 38 years of experience in the real estate sector. 

Anita Kapur is an Independent Director of the Company. She has been a director of the Company since  November 14, 2018. 

Professor R. Vaidyanathan is an Independent Director of the Company. He has been a director of the Company since December 13, 2018. 

COMPETITIVE STRENGTHS 

Part of the Shriram Group and Backed by Marquee Investors. 

One of the Leading Residential Real Estate Development Companies in South India with a Focus on Mid-market and Affordable Housing Categories. 

Demonstrated Capabilities in Project Identification and Strong Execution Track Record 

Established Strategic Relationships 

Scalable and Asset Light Business Model supported by our Strong Financial Position 

Well Positioned to Benefit from Regulatory and Industry Developments 

Experienced and Professional Management Team 

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

KEY CONCERNS 

Their business is capital intensive and is significantly dependent on the availability of real estate financing in  India.  

Shortages or disruption in the supply of labour and key building materials could affect the estimated construction cost and timelines. 

They depend on landowners or developers for obtaining certain regulatory approvals for the development management business any failure in that may adversely affect the business. 

The Indian real estate sector is heavily regulated. Changing laws, rules and regulations and legal uncertainties.

⮚ An increase in competition in the Indian real estate sector may adversely affect profitability.

⮚ The company has a significant amount of debt which could affect its ability to obtain future financing or pursue its growth strategy.

www.swastika.co.in 

For additional information & risk factors please refer to the Red Herring Prospectus 

IPO Note 

SHRIRAM PROPERTIES LIMITED 

COMPARISON WITH LISTED INDUSTRY PEERS 

Name of the Company  EPS (Basic)  NAV  P/E  P/BV  Total Income (mn)
Shriram Properties Limited  (4.60)  56.44  –  2.09  5,013.08
Peer Group
Sobha Limited  6.57  255.97  133.13  3.32  21,904.00
Prestige Estates Projects Limited  36.32  166.52  12.86  2.68  75,018.00
Brigade Enterprises Limited  (2.24)  111.32  –  4.08  20,103.90
Godrej Properties Limited  (7.48)  299.32  –  6.70  13,330.90
Oberoi Realty Limited  20.33  257.68  45.29  3.24  20,905.87
Sunteck Realty Limited  2.98  19.75  160.64  2.28  6,308.42

 

FINANCIALS (RESTATED CONSOLIDATED

Particulars (Rs. In Millions) FY 2021 FY 2020 FY 2019
Equity Share Capital 1,481.10 1,481.10 1,481.10
Other Equity 6,791.78 7,459.82 8,215.10
Net Worth 8,272.88 8,940.92 9,696.20
Total Borrowings 7,271.69 7,372.47 8,456.65
Revenue from Operations 5,013.08 6,318.43 7,237.80
EBITDA 1,210.53 904.14 799.30
Profit Before Tax (452.00) (816.58) 829.21
Net Profit for the year (674.80) (864.25) 480.62

Leave a Reply

Your email address will not be published. Required fields are marked *