South-based real estate developer Shriram Properties made a weak debut on the bourses on December 20 as the stock listed with a discount of 20 percent compared to the issue price of Rs 118 per share.
The stock opened at Rs 94 on the BSE.
The maiden public issue of the realty company had seen a good response from investors as the offer was subscribed 4.6 times during December 8-10, 2021. Retail investors showed strong interest in the company as their reserved portion was subscribed 12.72 times, followed by non-institutional investors whose allotted quota was booked 4.82 times.
A part set aside for qualified institutional buyers and employees saw 1.85 times and 1.25 times subscription, respectively.
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Shriram Properties mopped up Rs 600 crore through its public issue that comprised a fresh issue of Rs 250 crore and an offer for sale of Rs 350 crore. The company will repay certain borrowings availed by itself and its subsidiaries.
The price band for the offer was Rs 113-118 per equity share.
Most analysts had a "subscribe" rating on the issue, given its strong execution strategies and expected recovery in the sector after a long period.
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"Based on H1FY2022 numbers, the IPO is priced at a price to book value of 2.28 times at the upper price band of the IPO, which is in line with the listed peer group. We believe that the company has strong track record of delivering the project on time and can maintain strong execution which will get reflected in the pre-sales numbers going ahead," said Yash Gupta, Equity Research Analyst at Angel One. The brokerage had assigned a “subscribe” rating on Shriram Properties.
Akash Jain of Ajcon Global said at the upper end of the price band of Rs 118, the company's IPO was valued at price/book value of 2.3x, which is at a discount to peers and the pricing looks reasonable. "In terms of EV/EBITDA, the company is valued at a multiple of 15x," said Jain who recommended investors to "subscribe" to the issue, citing strong parentage, demonstrated capabilities in project identification, strong execution track record, development portfolio comprises of 35 projects, scalable and asset light business model, and decent financial performance.
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Shriram Properties is among the top five residential real estate companies in South India in terms of 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.
As of September 2021, SPL 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.
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