Shriram Properties shares list at 20% discount to Rs 94; investors incur loss of Rs 24 per share

Shares of Shriram Properties Limited made a weak stock market debut on Monday. Shares of one of the largest real estate players in the country was listed at 20.34% discount to Rs 94 per share on the BSE against its issue price of Rs 118 per share. Shares declined by Rs 24 per share on its debut.  

Earlier, pre-open indicative price on the BSE suggested a discount debut for shares of this real estate company. Shriram Properties Limited prelisting price stood at Rs 110, a discount of 6.78% or Rs 8 per share on the BSE.  

Ahead of the listing today, Zee Business Managing Editor Anil Singhvi said the public offer is very likely to be listed on the bourses below its issue price of Rs 118 per share. He suggested short-term investors to keep a stoploss of Rs110.

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Shares of Shriram Properties was booked 4.6 times on the final day of subscription on December 10. The Chennai-based residential real estate development company had aimed to raise Rs 600 crore via the public issue.  

Earlier, Aayush Agrawal, senior analyst, Swastika Investmart Ltd, also said that that Sriram Properties 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," he said.  

"Shriram 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 Agrawal.    

The real estate company mainly focuses on mid-market and affordable housing segment, having some projects in luxury housing also. It 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.

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.