Shriram Properties shares tank 20% on listing; make share market debut at deep discount to IPO price

Shriram Properties stocks started trading at Rs 94 per share, down Rs 24 or 20.34% from the IPO price of Rs 118 per share.

Shriram Properties IPO was fully subscribed. (Image: REUTERS)

Shriram Properties shares made a weak debut on the stock exchanges on Monday, 20 December 2021 amid bloodbath on D-Street. Shriram Properties stocks started trading at Rs 94 per share, down Rs 24 or 20.34% from the IPO price of Rs 118 per share. Shriram Properties had a market capitalisation of Rs 1,594.47 crore on listing. The Rs 600-crore initial public offering, which was launched earlier this month, received 4.6 times subscription. The public issue comprised fresh issuance of equity shares worth Rs 250 crore and an offer for sale (OFS) of Rs 350 crore. Shriram Properties has a major presence in south India. It has completed various real estate projects and many are under construction.

Domestic research and brokerage firm, Angel Broking, had suggested subscribing to the issue. Based on H1FY2022 numbers, Angel Broking said that the IPO was priced at a Price to Book value of 2.28 times at the upper price band of the IPO, which was in line with the listed peer group. Shriram Properties focuses on mid-market and affordable housing categories. “We believe that the company has a strong track record of delivering the project on time and can maintain strong execution which will get reflected in the pre-sales numbers going ahead,” Yash Gupta, Equity Research Analyst, Angel One, said. 

Before heading into the IPO, the company had raised over Rs 268 crore from the anchor investors. Considering the company’s healthy land bank, analysts at Reliance Securities expect a listing gain. “The realty sector is poised to grow led by low housing interest rates coupled with government’s initiatives to provide incentives to home buyers,” Vikas Jain, Senior Research Analyst, Reliance Securities, said. Jain further added saying that a good projects pipeline, stronger presence in core markets are the company’s key strengths. “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,” Jain said.

The company posted a loss of Rs 60 crore on revenues of Rs 118.2 crore in the six-month period ended September 2021. In the financial year ended March 2021, it reported a loss of Rs 68.2 crore against loss of Rs 86.4 crore in the previous year. Revenue from operations dropped from Rs 571.96 crore to Rs 431.5 crore during the same period.

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