The initial public offering (IPO) of Shriram Properties, a south India-based real estate developer, was subscribed 89 percent on December 8, the first day of bidding.
Bids had come in for 2.6 crore equity shares against issue size of 2.93 crore equity shares. The portion set aside for retail investors was subscribed 4.85 times, while employees had bid for 36 percent of the shares reserved for them.
Non-institutional investors portion has subscribed by 4 percent, while qualified institutional buyers are yet to put in their bids for the offer.
The company is planning to raise Rs 600 crore through the IPO that consists of a fresh issue of Rs 250 crore and an offer for sale of Rs 350 crore worth of shares. The offer will close on December 10.
A sum of Rs 268.65 crore has already been raised by the company through the anchor book on December 7, at a price of Rs 118 a share.
"Fundamental factors like historically low home loan interest rates, stagnant residential prices and reduction of stamp duty in certain markets, are very favourable for the affordable residential real estate market. Further, with easing of pandemic restrictions, we are anticipating a renewed interest from home buyers," said Choice Broking.
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Shriram Properties has a presence in key south Indian markets of Bengaluru and Chennai. "These two cities are among the two key residential housing markets in India and will continue to be among the top cities in terms of growth," said the brokerage.
The company, as of September, had completed 29 projects, 35 were under development and projects aggregating to 46.72 million square feet of estimated saleable area were in the pipeline.
It has land reserves of approximately 197.47 acre, with a development potential of approximately 21.45 million square feet of estimated saleable area.
Also read: Shriram Properties IPO opens on Wednesday: 10 things to know before subscribing to the issue
SPL’s business was severely hit during the second coronavirus wave. "And thus, it is likely to perform relatively better in the coming quarters. The company is backed by marquee investors and also has financial investors in its projects," Choice Broking said.
Promoters M Murali, Shriram Properties Holdings, and Shriram Group Executives Welfare Trust have 31.98 percent shareholding in the company. Investors including Tata Capital Financial Services, Omega TC Sabre Holdings, WSI/WSQI V (XXXII) Mauritius and TPG Asia SF V hold the remaining stake.
"At the higher price band of Rs 118, Shriram Properties is demanding a price-to-book value multiple of 1.8x, which is at significant discount to the peer average of 4.6x. Thus, considering the above observations, we assign a “subscribe” rating for the issue," said Choice Broking.
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