Shriram Properties IPO has an issue size of Rs. 600 crores, a combination of fresh issue of Rs. 250 crores and an offer for sale worth Rs. 350 crores. Shriram Properties Limited is a part of the Shriram Group and is one of the leading residential real estate development companies in South India. The developer has focus on the mid-market and affordable housing categories.
Shriram Properties IPO Details:
Opening Date
Wednesday, 8th December, 2021
Closing Date
Friday, 10th November, 2021
Issue Details
Fresh Issue of Equity Shares upto ₹ 250 Cr
+ Offer for Sale of Equity Shares aggregating upto ₹ 350 Cr
Face Value
₹ 10/-
Issue Size (₹ Cr)
₹ 600 Cr
Bid Lot
125 shares
Price Band
₹ 113 – 118
QIB
75% of the net offer
NIB
15% of the net offer ( (₹ 89.55 Cr)
Retail
10% of the net offer ( ~5,059,321 Shares 59.70 Cr)
Appl for 1x retail
~0.4 Lacs
Updates :
ANCHOR ISSUE:Shriram Properties on December 7 garnered Rs 268.65 crore from 34 anchor investors, ahead of its initial public offering that will open for subscription on December 8.
Global investors including Optimix Wholesale Global Emerging Markets, Societe Generale, Pioneer Investment Fund, Nomura, and Blue Mount Capital made investments in the company through the anchor book. Domestic investors — SBI Life Insurance, Sundaram Mutual Fund, Aditya Birla Sun Life, Nippon Life, HDFC Life Insurance Company, and HDFC Trustee — also participated in the anchor book
Shriram Properties IPO Review: Video Presentation
About Shriram Properties (India)
Shriram Properties Limited is part of Shriram Group and was incorporated in 2000.
Primarily focused on the mid-market and affordable housing categories.
Company is also present in the mid-market premium and luxury housing categories as well as commercial and office space categories
As on Sept 30, 2021, the company has completed 29 projects, representing 16.76 million square feet of saleable area, mostly in Bengaluru and Chennai. Company is among the top five residential real estate companies in South India in terms of 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..
Company commenced operations in Bengaluru in the year 2000 and have since expanded our presence to other cities in South India, i.e., Chennai, Coimbatore and Visakhapatnam.
Shriram Properties IPO: Financials
Particulars / (₹ In Cr)
2021(06)
2021(12)
2020(12)
2019(12)
Revenue from Operations
118.18
431.5
571.96
650.13
Revenue Growth (%)
–
-24.56%
-12.02%
–
EBITDA
37.07
121.05
90.41
79.93
EBITDA Margin (%)
23.89%
24.15%
14.31%
11.04%
Adj, EBITDA
39.16
124.04
102.45
119.55
Adj. EBITDA Margin (%)
25.08%
24.62%
16.16%
16.39%
Profit before Tax
-52.72
-45.2
-81.66
-82.92
Net Profit
-60.03
-68.18
-86.39
-48.79
Equity Share Capital
148.11
148.11
148.11
148.11
Net worth
768.78
837.54
904.46
979.7
EPS (₹ )
-4.6
-4.6
-5.8
3.39
Net Asset Value (₹ )
51.8
56.43
60.94
66.01
Post IPO Equity
169.6
FV
10
IPO Price
118
Market Cap
2001
Market Cap / Sales
4.64
Salient Points
As a part of OFS, Omega TC Sabre Holdings Pte Ltd will offload shares worth up to Rs 90.95 crore, Tata Capital Financial Services Ltd for Rs 8.34 crore, while TPG Asia SF V Pte Ltd and Wsi/Wsqi V (XXXII) Mauritius Investors Ltd will divest shares worth up to Rs 92.20 crore and Rs 133.5 crore, respectively.
83.69% of the total Saleable Area for Completed Projects were in the mid-market category and affordable housing category (accounting for 51.44% and 32.25% respectively), and the remainder in the commercial and office space and luxury housing categories.
Bengaluru and Chennai are two key markets for them.. In addition, they also have presence in Kolkata in East India.
Has benefited from the strategic inputs and support of marquee Investors
.
Cons
Its business and profitability is significantly dependent on the performance of the real estate market in India
Its real estate development activities are geographically concentrated in key cities in South India.
The company has a significant amount of liabilities.
Has made losses for almost 6 years now.
The business is capital intensive and is significantly dependent on the availability of real estate financing in India.
PE investors are exiting partly at a loss.
Legal uncertainties with regard to title and development rights:6 out of 26 of ongoing projects are involved in 15 land dispute litigation proceedings.
Investors
The company has also attracted multiple financial investment (from investors like SUN Apollo India Real Estate Fund I LLC, Mitsubishi Corporation, Amplus Capital Advisors, ASK Real Estate Special Opportunities Fund, India Realty Excellence Fund II LLP managed by Motilal Oswal and Kotak Affordable India Fund) in its projects.
The company has entered into partnership with Kotak Affordable India Fund (a joint investment vehicle focused on investing into affordable housing projects between CDC of UK and Kotak Alternative Investment Managers) wherein the company has secured capital from the fund towards 50% economic interest in Sunshine One (formerly known as Shriram Grand-2), as part of its project in Kolkata.
Company has entered into partnership with Mitsubishi Corporation for its Project Shriram Park 63 at Chennai.
The company proposes to leverage such arrangements to reduce its capital exposure by sharing risk and rewards with financial investors and thus translating into better net margin
Comparison with Peers
Company
Shriram Properties
Sobha
Brigade Enterprises
Prestige Estates
Purvankara
Sunteck Realty
Revenues Fy21
431
2,110
1,950
7,264
961
614
FV
10
10
10
5
1
CMP
118
860
506
451
137
447
Market Cap
2001
8,147
11,625
18,050
3244
6,539
P/S
4.64
3.86
5.96
2.48
3.38
10.65
P/B
2
3.3
4.17
2.61
1.56
2.26
D/E
0.87
1.16
1.86
0.84
1.23
0.24
P/E (TTM)
82,6
423.66
45.8
17.2
117
Shriram Properties IPO: Assessment
Part of Shriram Group
40% sales from customer referrals
The residential housing market performed strongly during the quarter ended September 30, 2021, i.e., the third quarter of 2021, with residential unit sales and new launches of residential projects experiencing the strongest results since the outbreak of the COVID-19 pandemic
Shriram Properties is transitioning from a real estate development model to a combination of real estate development and real estate services based business model, with a shift towards an asset light business strategy.
Has successfully stabilized the development management (“DM”) model in their core markets having entered into definitive agreements for 14 projects which accounts for 31.92% of total total project portfolio.
In general Real estate sector has been going through considerable consolidation.
The pre-sales volumes grew at a CAGR of 22.61% between the financial years 2017 and 2021.
The company could report a net profit in FY22
Though company D/E ratio is comfortable it has huge liabilities.
it has a credit rating of BBB+/Stable from CARE Ratings.
It total outstanding borrowings of Rs 695.10 crore as of September 30, 2021.Despite a poor profitability record I may apply in small to moderate numbers for the IPO on last day subject to good QIB response. This stems from good amount of faith in management, expectation of it turning profitable in near future, faith of large investors and favorable sector trends.
Investors must be aware that IPO is rather risky and immediate rewards if any will not be high. Omicron scenario also adds to short term uncertainty
Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.