Shriram Properties Limited, one of the leading residential real estate development companies in South India focusing primarily on the mid-market and affordable housing segments will launch its maiden public offering on December 08.
It is part of Shriram Group, which has listed companies like Shriram Transport Finance (STFC) and Shriram City Union Finance (SCUF) under its umbrella.
Here are 10 key things to know before subscribing to the public issue:
1. IPO Dates
The public issue will open for subscription for retail investors on Wednesday, December 08 and close on Friday, December 10.
Check out all the live market action here.
2. Price Band
The price band for the offer has been fixed at Rs 113-118 per share of face value Rs 10 each.
3. Offer Details
The initial public offering comprises a fresh issue of Rs 250 crore, and an offer for sale of Rs 350 crore by investors including Omega TC Sabre Holdings Pte Ltd (Rs 90.9 crore), Tata Capital Financial Services (Rs 8.3 crore) , TPG Asia SF V Pte Ltd (Rs 92.2 crore) , and WSI/WSQI V (XXXII) Mauritius Investors (Rs 133.5 crore).
In addition, other shareholders will sell up to Rs 25 crore worth of shares. Equity shares aggregating up to Rs 3 crore are reserved for the employees of the company.
Promoter shareholding after the issue will come down to 27.98% from the present holding of 31.98%.
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4. Objectives of the Issue
The company aims to utilise the net proceeds from the issue towards repayment and/or pre-payment, in full or part, of certain borrowings availed by the company and its subsidiaries, Shriprop Structures, Global Entropolis and Bengal Shriram, amounting to ~Rs 200 crore, besides general corporate purposes.
5. Lot Size and Investor’s Reserved portion
Investors can bid for a minimum of 125 equity shares and in multiples of 125 equity shares thereafter. Retail investors can invest a minimum of Rs 14,750 for one lot, and their maximum investment would be Rs 1,91,750 for 13 lots.
To be sure, retail investors are allowed to invest up to Rs 2 lakh in an IPO.
6. Company Profile & Industry
Incorporated in 2000, the company started its operations in Bengaluru and is among the top five residential real estate companies in South India in terms of number of units launched between 2012 and the third quarter of 2021 across Tier 1 cities of South India including Bengaluru, Chennai and Hyderabad.
Bengaluru and Chennai are the two key markets for the company, but it also has a presence in Kolkata.
As of September, the company has 29 completed projects, representing 16.76 million square feet (msf) of saleable area, out of which Bengaluru and Chennai accounted for 90.6% of the saleable area.
About 83% of the total saleable area for completed projects was in the mid-market and affordable housing category, while the remaining was in the commercial and office space and luxury housing categories.
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As of September, it has a 35 projects in ongoing, under development and forthcoming projects aggregating to 46.72 msf of estimated saleable area. In addition, it has land reserves of approximately 197.47 acres, with a development potential of approximately 21.45 msf of estimated saleable area.
The company is transitioning from a real estate development model to a combination of real estate development and real estate services based business model, with a shift towards an asset light business strategy.
The real estate development industry in India, while fragmented, is highly competitive. Among the few organised entities in this sector, the company’s chief competitors in South India are large developers such as Prestige Estates Project, Brigade Enterprises, Embassy Group, Puravankara Projects, RMZ Corp and Sobha Developers.
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7. Financials
The company posted a loss of Rs 60.0 crore on revenues of Rs 118.2 crore in the six months period ended September 2021.
In the financial year ended March 2021, it reported a loss of Rs 68.2 crore against loss of Rs 86.4 crore in the previous year. Revenue from operations dropped to Rs 431.5 crore from Rs 571.96 crore during the same period.
8. Key Risks
The price bracket of Rs 113-118 per share values the company at Rs 1,752 crore at the top end of the bracket, which could be a big risk for investors as majority of the issue is from the OFS portion.
9. Promoters & Management
M Murali is the individual promoter and Chairman and Managing Director of the company.
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Gautam Radhakrishnan is a Non-Executive Nominee Director while TS Vijayan, KG Krishnamurthy, Anita Kapur and Professor R Vaidyanathan are the Independent Directors of the company.
Key Managerial Personnel
Gopalakrishnan J is the Executive Director and Group CFO of the company and K.R Ramesh is the Executive Director – Operations of the company.
10. GMP, Listing & Allotment Date
The grey market premium for the IPO is currently at Rs 20 per share as per IPO watch.
The share allotment will be finalised by December 15 and unsuccessful investors will get refunds in their bank accounts by December 16, while successful investors will get shares in their demat accounts by December 17.
Trading in equity shares on the BSE and NSE will commence from December 20.
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