IPO Report - Shriram Properties Ltd By Swasika Investmart
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SHRIRAM PROPERTIES LIMITED
Incorporated in 2000, Shriram Properties is a part of the Shriram Group and is one of the leading residential real estate development companies in South India. The company primarily focuses on the mid-market and affordable housing segments. The company is also present in the midmarket premium and luxury housing categories as well as commercial and office space categories. Bengaluru and Chennai are the key markets for the company. The company also has operations in Coimbatore, Visakhapatnam, and Kolkata.
* It 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
* It is a part of the Shriram Group, which is a prominent business group with four decades of operating history in India and a wellrecognized brand in the retail financial services sector and several other industries.
* Company has been focused on the mid-market and affordable housing categories as its target segment within the residential housing market. The mid-market and affordable housing categories have accounted for significant share of overall market absorption in India in recent years. According to the JLL Report, these housing categories accounted for 75.00%, 72.00% and 74.00% of overall residential unit absorption during calendar years 2018, 2019 and 2020, respectively.
* As of September 30, 2021, it has a total portfolio of 35 projects in Ongoing Projects, Projects under Development and Forthcoming Projects aggregating to 46.72 million square feet of estimated Saleable Area.
Outlook & Valuation:
The company's financials have been on a weaker note where revenues of the company are declining while the company turned loss-making since FY20. The company's revenues in FY19 were Rs. 723 cr, which fell to Rs 501 cr in FY21, while it made a profit of Rs 48 cr in FY19 and a loss of Rs 67 cr in FY21. Despite strong brand recognition, the company has suffered losses during the COVID, when real estate and housing were booming. Being a loss-making company retail portion is 10%. The IPO is arriving at a P/BV of 2.09x while the industry average is 3.69x which might attract minor listing gain. However, we believe that there are many reputable listed companies such as Sobha, Brigade, Prestige, etc., and only "AGGRESSIVE INVESTORS" should apply for the IPO.
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