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Shriram Properties Limited was incorporated in 2000, company is a group company of Shriram Group. 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. Shriram Properties is among the Top-5 residential real estate developers in South India in terms of the number of units launched since 2015. Company focus markets are Bengaluru and Chennai, along with this company has a presence in Kolkata and Hyderabad.

Positives (a) Good Launch Pipeline – Company having a saleable area of 26.3 msf(million square feet) under ongoing projects and 8.27 msf project under development. (b). The company is part of the Shriram Group and backed by marquee investors like TPG, Tata Opportunities Fund, Walton Street. (c). Company having a strong execution track record of completing the project and delivering the project on time.

Investment concerns: (a) Increase in competition, Bangalore market is the key market for Shriram Properties Ltd and we have seen an increase in competition in the Bangalore market. (b) Company not have much completed inventory, so upcoming sales will be dependent on the new launch of projects and it will take time to launch new projects. (c) Out of 26 ongoing projects, 18 projects are based in Bangalore market, any change in rule and regulation will impact the company.

Outlook & Valuation: Based on H1FY2022 numbers, the IPO is priced at a Price to Book value of 2.28 times at the upper price band of the IPO, which is in line with the listed peer group. Company is one of the leading residential real-estate developers in south India and focuses on mid-market and affordable housing categories. We believe that the company has 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. Hence, we are assigning a “SUBSCRIBE” recommendation to the Shriram Properties Limited IPO.

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