Shriram Properties IPO: Shares of this real estate company may see weak listing today, says expert

One of the leading players in real estate, Shriram Properties Limited closed its initial public offering (IPO) with 4.6 times subscription on December 10. Shares of Shriram Properties Limited are scheduled to be listed on the exchanges on Monday, December 20, as per discount broker Zerodha.  

The Chennai-based residential real estate development company aims to raise Rs 600 crore via the public issue.  

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Ahead of the listing, a market expert is of the view that the public offer of this real estate player may see a weak listing due to Covid affecting this sector.  

"Although the company has a strong brand name in South India, but during COVID, when real estate was booming, the company suffered losses," said Aayush Agrawal, senior analyst, Swastika Investmart Ltd.

"Sriram Properties has an MCAP/Sales ratio of 4.6x, while its peers Sobha, Puravankara, and Prestige offer 3.8x, 3.3x, and 2.4x respectively. The grey market premium currently trades between 8-10%. Given the current market trends, we might see a comparatively weak listing," said Aayush Agrawal.  

Earlier, the company had fixed a price band of Rs 113 – Rs 118 for this IPO. Total issue size of Rs 600 crore comprises Rs250 crores of fresh issue and an offer for sale of ₹350. The company has fixed the market lot of 125 shares. Minimum order quantity is one lot and the maximum subscription amount for retail investors is Rs 2 lakh, while for eligible employees it is Rs 5 lakh.

KFin Technologies Private Limited has been appointed as registrar for this issue.  

Earlier, Yash Gupta, Equity Research Analyst, Angel One Ltd, had highlighted that the company has reported a negative profit after tax of Rs 60 crore in the first half of 2022 along with that it has also reported a negative profit after tax of Rs 68.1 crores in 2021. "Company has reported degrowth in revenue for the past 2 years. In 2021, the company reported revenue of ₹501 crores down by 20.7% from Rs 631.8 crores in 2020," he had said.  

Shriram Properties mainly focuses on mid-market and affordable housing segment, having some projects in luxury housing also. Along with residential housing companies having presence in commercial office space also. Bengaluru and Chennai are two key markets for the company with operations in Coimbatore, Visakhapatnam, and Kolkata.