Shriram Properties IPO 89% On First Day Of Issue

Shriram Properties share sale via initial public offering (IPO) was subscribed 89 per cent on the first day of its issue, according to subscription data on the stock exchanges. The real estate developer plans to raise Rs 600 crore via IPO which consists of an offer for sale worth Rs 350 crore and fresh issue of Rs 250 crore.

On Wednesday, the portion reserved for retail individual investors was subscribed 4.85 times - the highest among the three groups of investors. The portion set aside for qualified institutional buyers or QIB was unsubscribed, while the portion reserved for non-institutional investors was subscribed 0.04 times.

The company is selling its shares in the price band of Rs 113- Rs 118 per equity share and a retail investors can bid for minimum one lot size of 125 shares and up to maximum of 13 lots. One lot of Shriram Properties shares in the IPO will cost Rs 14,750.

75 per cent of the issue is reserved for qualified institutional buyers, 15 per cent for high net worth individuals and 10 per cent for retail investors. The company will utilise the IPO proceeds to repay and/pre-pay debt and for general corporate purposes.

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.

''At the higher end of the price band, Shriram Properties IPO is priced at a price to book value of ~2.29 times (Apr-Sep 21). This seems to be in-line with listed peer Prestige Estates (2.61 times), but lower than Oberoi Realty (3.10 times), DLF (2.63 times), Sobha (3.25 times), Godrej Properties (6.51 times).

When compared on an EV/ EBITDA basis, Shriram Properties seems to be aggressively priced as compared to peers, due to lower earnings in the previous years. Notably, Prestige, Sobha and Oberai have higher return ratios than Shriram Properties.  

Given a drop in revenues, negative earnings, uncertain outlook due to the ongoing pandemic, and high valuations, we remain “Neutral” on the prospects of the issue," SEBI-registered investment advisor said in a report.