IPO Note - Shriram Properties Ltd By Choice Broking
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Salient features of the IPO:
Real-estate developer Shriram Properties Ltd. (SPL), a part of Shriram Group is coming up with an IPO to raise Rs. 600cr, which opens on 8th Dec. and closes on 10th Dec. 2021. The price band is Rs. 113 - 118 per share.
* The issue is a combination of fresh and OFS. The company will not receive any proceeds from the OFS part of the issue. From the net fresh issue proceeds, Rs. 200cr will be utilized for the repayment/prepayment of certain borrowings availed by the company.
Key competitive strengths:
* Part of the Shriram Group and backed by marquee investors
* One of the leading residential real estate development companies in South India with focus on mid-market and affordable housing categories
* Demonstrated capabilities in project identification and strong execution track record
* Established strategic relationships
* Scalable and asset light business model supported by strong financial position • Well positioned to benefit from regulatory and industry developments
* Experienced and professional management team.
Risk and concerns:
* Unfavorable government policies and regulations
* Continued risk from the Covid-19 pandemic
* Unfavorable movement in the interest rates
* Delay in project execution
* Slower expansion of the development management
* Sustained higher cost of construction
* Competition
Below are the key highlights of the company:
* Commencing operations in 2000, SPL is one of the leading residential real estate development companies in South India, primarily focusing on the mid-market and affordable housing categories. It is a part of the Shriram Group, which is a prominent business group with four decades of operating history in India and a well-recognized brand in the retail financial services sector and several other industries. Association with the Group benefits the company from the trust and confidence that homebuyers, lenders, financial investors, landowners, development partners, contractors and other stakeholders have on the Shriram brand.
* SPL is well supported by marquee private equity investors like TPG, Tata Opportunities Fund, Walton Street Capital and Starwood, which cumulatively held 58.35% equity stake. Through this IPO, these investors are partially offloading their stake. 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.
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