Shriram Properties Limited IPO opens today; what analyst, brokerage recommend?

The initial public offer (IPO) of Chennai-based residential real estate development company - Shriram Properties Limited - will open for subscription on Wednesday, 8th December. The three-day IPO will close on 10th December.  

One of the leading players in the real estate, Shriram Properties Limited plans to raise Rs 600 crore via public issue, as per NSE.    

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The company has fixed the price band of Rs 113 – Rs 118 and a lot of 125 shares for this IPO. Total issue size of Rs 600 crore comprises Rs 250 crore of fresh issue and an offer for sale of Rs 350.  
Minimum order quantity is one lot and a maximum subscription amount for retail Investor 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.     

What should investors do?  
Marwadi Shares and Finance Limited has dubbed the valuation expensive and suggested to avoid this issue.  

"Considering FY21 EBITDA of Rs 512.44 million on post-issue basis, the company is going to list at EV/EBITDA of 51.84 with the market cap of Rs 20,013 million. Its peers namely Sobha Limited and Oberoi realty limited are trading at EV/EBITDA of 15.60 and 33.00, respectively. We assign “Avoid” rating to this IPO as valuation is expensive as compared to its peers," said Marwadi Shares and Finance Limited in its report

Outlook

Angel One Ltd has given a positive outlook towards Shriram Properties Limited IPO.  
Shriram Properties mainly focus 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.

Without rating the IPO, Yash Gupta, Equity Research Analyst, Angel One Ltd, said It is one of the leading players in the residential real-estate market of South India. 
"For Shriram Properties, Bangalore and Chennai are the key markets along with that company operates in Coimbatore, Visakhapatnam, and Kolkata. As of Q2FY22, the company completed more than 29 projects and had a total portfolio of more than 25 projects with a total 46.72 million Sq Ft of salable area. We have a positive outlook towards Shriram Properties Limited IPO," he said.  

Degrowth in revenue  
Gupta 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. "The company has reported degrowth in revenue for the past 2 years. In 2021, the company reported revenue of Rs 501 crore down by 20.7% from Rs 631.8 crores in 2020," he said.  

Shriram Properties Limited IPO Timeline:  
Opening date: December 8
Closing date: December 10  
Share finalization for allotment: Likel on December 16
Refund Initiation: December 17
Transfer of shares to Demat account: Likely by December 20
Listing on exchange: December 21
Source: Edelweiss app