One of the leading residential real estate development companies in South India, Shriram Properties is all set to launch its initial public offering to raise Rs 600 cr. The real estate firm is focused on the mid-market and affordable housing categories. The firm is among the five largest residential real estate companies in South India, including specifically in Bengaluru and Chennai, in terms of several aggregate units launched in the calendar years 2012 to 2017 and the six months ended June 30, 2018. Shriram Properties have commenced operations in Bengaluru in the year 2000 and, have expanded their presence to other cities in South India, i.e., Chennai, Coimbatore, and Visakhapatnam. In addition, the firm also has its presence in Kolkata in East India, where the company is developing a large mixed-use project. Bengaluru and Chennai are two key markets for them.
The IPO to raise an amount of Rs 600 cr to consist of a fresh issue worth Rs 250 crores and offer for sale of share worth Rs350 crores. Under offer for sale, Omega TC Sabre Holdings, Tata Capital Financial Services, and TPG Asia SF will collectively be selling their shares. The price band for the Shriram properties IPO has been fixed at Rs 113-118. The IPO will open for subscription from 8th December and the sale of shares will continue till 10th December 2021. Shares will be allotted on the 15th December 2021. In case of any investor who didn’t receive any allotment, the amount will be refunded to them on 16th December and finally the IPO to list on both NSE and BSE on 20th December 2021. Grey’s market premium for the IPO is around Rs20, above the higher side of the price band. The portion of IPO reserved for Qualified institutional investors, retail investors, and high net worth investors at, 75%, 10%, and 15%, respectively. A retail investor can invest a minimum of Rs Rs 14,750 buying 1 lot consisting of 125 shares, and a maximum of RS 191,750 consisting of 13 lots cumulatively making it 1625 shares. Axis Capital Limited, ICICI Securities Limited, Nomura Financial Advisory And Securities (India) Pvt Ltd will be acting as lead managers for the IPO and KFintech is the registrar of the IPO.
The firm will not receive any proceeds from the offer for sale however net proceeds from the fresh issue will be utilized for repayment and/ or pre-payment, in full or part, of certain borrowings availed by the company and its subsidiaries, Shriprop Structures, Global Metropolis, and Bengal Shriram. Further, it also spends some portion on general corporate purposes.
The firm has a strong basis with an asset-light business model coupled with Strong strategic relationships with financial investors. However, in the last two years, the firm has failed to make any profit. Net profit for the real estate company continued to shrink for two consecutive years from Rs 487.91 million earned in 2019 to the loss of Rs 863.93 million incurred in 2020. Further, 20201 seems no different with the first 9 months posting a loss of Rs 650.24 million. The firm might have string backed up by experienced promoters and backing of reputed Shriram group, but financial numbers are certainly not speaking well.
Investors must do their research before investing in the IPO, as investments in the market are subject to the systematic risk that is unavoidable. For detailed information on the financials of the Shriram Properties login to Invest19.com.