| Rating |
| SUSBCRIBE
(Only Aggressive Investors) |
| Issue Offer | |
| Issue Opens on | Dec 08, 2021 |
| Issue Close on | Dec 10, 2021 |
| Total IPO size (cr) | 600 |
| Fresh issue | 250 |
| Offer For Sale (cr) | 350 |
| Price Band (INR) | 113-118 |
| Market Lot | 125 |
| Face Value (INR) | 10 |
| Retail Allocation | 10% |
| Listing On | NSE, BSE |
| Objects of the issue
⮚ For repayment of borrowings. ⮚ For general corporate purposes. |
| Issue Break-up (%) | |
| QIB Portion | 75 |
| NIB Portion | 15 |
| Retail Portion | 10 |
| ⮚ Shareholding (No. of Shares) | |
| Pre Issue | 148,411,448 |
| Post Issue | 169,597,889 |
| Indicative Timetable | |
| Finalisation of Basis of Allotment | 15-12-2021 |
| Refunds/Unblocking ASBA Fund | 16-12-2021 |
| Credit of equity shares to DP A/c | 17-12-2021 |
| Trading commences | 20-12-2021 |
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- Incorporated in 2000, Shriram Properties is a part of the Shriram Group and is one of the leading residential real estate development companies in South India.
- The company primarily focuses on the mid-market and affordable housing segments. The company is also present in the mid-market premium and luxury housing categories as well as commercial and office space categories.
- Bengaluru and Chennai are the key markets for the company. The company also has operations in Coimbatore, Visakhapatnam, and Kolkata. It is among the top five residential real estate companies in South India in terms of the 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.
- It is a part of the Shriram Group, which is a prominent business group with four decades of operating history in India and a well-recognized brand in the retail financial services sector and several other industries.
- The company has been focused on the mid-market and affordable housing categories as its target segment within the residential housing market. The mid-market and affordable housing categories have accounted for a significant share of overall market absorption in India in recent years. According to the JLL Report, these housing categories accounted for 75.00%, 72.00% and 74.00% of overall residential unit absorption during calendar years 2018, 2019 and 2020, respectively.
- As of September 30, 2021, it 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.
Outlook & Company Valuation:
The company’s financials have been on a weaker note where revenues of the company are declining while the company turned loss-making since FY20. The company’s revenues in FY19 were Rs. 723 cr, which fell to Rs 501 cr in FY21, while it made a profit of Rs 48 cr in FY19 and a loss of Rs 67 cr in FY21.
Despite strong brand recognition, the company has suffered losses during the COVID, when real estate and housing were booming. Being a loss-making company retail portion is 10%.
The SME IPO is arriving at a P/BV of 2.09x while the industry average is 3.69x which might attract minor listing gain. However, we believe that there are many reputable listed companies such as Sobha, Brigade, Prestige, etc., and only “AGGRESSIVE INVESTORS” should apply for the IPO.
IPO Note
SHRIRAM PROPERTIES LIMITED
KEY MANAGERIAL PERSONNEL
⮚ M. Murali is the Chairman and Managing Director and individual Promoter of the Company. He has over 17 years of work experience with this Company and was first appointed as a Director on March 30, 2003.
⮚ S. Natarajan is a Non-Executive Director of the Company.
He is a member of the Institute of Chartered Accountants of India since 1975. He has been associated with the Shriram group for over 17 years and has been a Director of the Company since March 30, 2003.
⮚ Raphael Dawson is a Non-Executive Nominee Director of the Company. He has more than 15 years of work experience.
⮚ Gautham Radhakrishnan is a Non-Executive Nominee Director of the Company. His career has been exclusively in private equity and corporate finance.
⮚ T.S. Vijayan is an Independent Director of the Company. He has many years of experience in the insurance sector and was formerly the Chairman of the Life Insurance Corporation of India.
⮚ K.G. Krishnamurthy is an Independent Director of the Company. He has over 38 years of experience in the real estate sector.
⮚ Anita Kapur is an Independent Director of the Company. She has been a director of the Company since November 14, 2018.
⮚ Professor R. Vaidyanathan is an Independent Director of the Company. He has been a director of the Company since December 13, 2018.
COMPETITIVE STRENGTHS
⮚ Part of the Shriram Group and Backed by Marquee Investors.
⮚ One of the Leading Residential Real Estate Development Companies in South India with a Focus on Mid-market and Affordable Housing Categories.
⮚ Demonstrated Capabilities in Project Identification and Strong Execution Track Record
⮚ Established Strategic Relationships
⮚ Scalable and Asset Light Business Model supported by our Strong Financial Position
⮚ Well Positioned to Benefit from Regulatory and Industry Developments
⮚ Experienced and Professional Management Team
⮚ The company has strong, proven capabilities in the identification and execution of projects.
KEY CONCERNS
⮚ Their business is capital intensive and is significantly dependent on the availability of real estate financing in India.
⮚ Shortages or disruption in the supply of labour and key building materials could affect the estimated construction cost and timelines.
⮚ They depend on landowners or developers for obtaining certain regulatory approvals for the development management business any failure in that may adversely affect the business.
⮚ The Indian real estate sector is heavily regulated. Changing laws, rules and regulations and legal uncertainties.
⮚ An increase in competition in the Indian real estate sector may adversely affect profitability.
⮚ The company has a significant amount of debt which could affect its ability to obtain future financing or pursue its growth strategy.
IPO Note
SHRIRAM PROPERTIES LIMITED
COMPARISON WITH LISTED INDUSTRY PEERS
| Name of the Company | EPS (Basic) | NAV | P/E | P/BV | Total Income (mn) |
| Shriram Properties Limited | (4.60) | 56.44 | – | 2.09 | 5,013.08 |
| Peer Group | |||||
| Sobha Limited | 6.57 | 255.97 | 133.13 | 3.32 | 21,904.00 |
| Prestige Estates Projects Limited | 36.32 | 166.52 | 12.86 | 2.68 | 75,018.00 |
| Brigade Enterprises Limited | (2.24) | 111.32 | – | 4.08 | 20,103.90 |
| Godrej Properties Limited | (7.48) | 299.32 | – | 6.70 | 13,330.90 |
| Oberoi Realty Limited | 20.33 | 257.68 | 45.29 | 3.24 | 20,905.87 |
| Sunteck Realty Limited | 2.98 | 19.75 | 160.64 | 2.28 | 6,308.42 |
FINANCIALS (RESTATED CONSOLIDATED)
| Particulars (Rs. In Millions) FY 2021 FY 2020 FY 2019 |
| Equity Share Capital 1,481.10 1,481.10 1,481.10 |
| Other Equity 6,791.78 7,459.82 8,215.10 |
| Net Worth 8,272.88 8,940.92 9,696.20 |
| Total Borrowings 7,271.69 7,372.47 8,456.65 |
| Revenue from Operations 5,013.08 6,318.43 7,237.80 |
| EBITDA 1,210.53 904.14 799.30 |
| Profit Before Tax (452.00) (816.58) 829.21 |
| Net Profit for the year (674.80) (864.25) 480.62 |
