The public issue will open for subscription on Wednesday, December 08 and close on Friday, December 10. The price band has been fixed at Rs 113-118 per share of face value Rs 10 each. Investors can bid for a minimum of 125 equity shares and in multiples of 125 equity shares thereafter. Retail investors can invest a minimum of Rs 14,750 for one lot, and their maximum investment would be Rs 1,91,750 for 13 lots.
The initial public offering comprises a fresh issue of Rs 250 crore, and an offer for sale of Rs 350 crore by investors including Omega TC Sabre Holdings, Tata Capital Financial Services, TPG Asia SF, and Mauritius Investors. In addition, other shareholders will sell up to Rs 25 crore worth of shares. Equity shares aggregating up to Rs 3 crore are reserved for the employees of the company. Promoter shareholding after the issue will come down to 27.98% from the present holding of 31.98%.
The company aims to utilise the net proceeds from the issue towards repayment and/or pre-payment, in full or part, of certain borrowings availed by the company and its subsidiaries, Shriprop Structures, Global Entropolis and Bengal Shriram, amounting to Rs 200 crore, besides general corporate purposes.
Part of the Shriram Group and backed by Marquee Investors, Shriram Properties Limited is one of the leading residential real estate development companies in South India, primarily focused on the mid-market and affordable housing categories. The company is among the top five residential real estate companies in South India in terms of number of units launched between year 2012 and the third quarter of 2021 across Tier 1 cities of South India including Bengaluru, Chennai and Hyderabad.
As of September 30, 2021, the company has completed 29 Projects, representing 16.76 million square feet of Saleable Area, out of which their 24 Completed Projects in the cities of Bengaluru and Chennai. And on the same period Company has land reserves of approximately 197.47 acres, with a development potential of approximately 21.45 million square feet of estimated saleable area.
The company has asset light business strategy where they have developed projects through Joint ventures with landowners of the proposed projects, and in certain cases, with financial investors, in order to reduce up-front costs, while leveraging their brand name and execution experience. The company provides end-to-end real estate development services to smaller real estate developers and other landowners in relation to timely and quality execution, branding, marketing and sales, collections and client management and facilitating financing arrangements.
Considering FY21 EBITDA of Rs. 512.44 mn on post issue basis, the company is going to list at EV/EBITDA of 51.84 with the market cap of Rs.20,013 mn. While its peers namely Sobha Limited and Oberoi realty limited are trading at EV/EBITDA of 15.60 and 33.00 respectively. As of September 30, 2021, approximately 22.09% of company’s estimated Saleable Area is located in Kolkata, West Bengal; as a result company’s future financial condition and results of operations are significantly dependent on the conditions affecting the real estate market in Kolkata.
The company has a significant amount of debt, which could affect their ability to obtain future financing or pursue their growth strategy.
We feel valuation is expensive as compared to its peers.
