In a poor market, real estate developer Shriram Properties launched its shares on the BSE on December 20 at a 20% discount to its issue price, at Rs 94.
The company’s maiden public offering was enthusiastically received by investors, with 4.6 times subscription between December 8 and 10. At a price range of Rs 113-118 per equity share, the public sale raised Rs 600 crore for the Shriram Group.
Anand Rathi recommended investors to ‘avoid’ the stock, citing the company’s net loss since FY20, while Angel One and Choice Broking gave it a’subscribe’ recommendation.
Shriram Properties lost Rs 60.03 crore on revenue of Rs 118.17 crore in the six months ended September 2021.
Due to favourable variables such as historically low house loan interest rates, static residential prices, and stamp duty decreases in select areas, we have a bullish outlook on the industry.
With operations in Bengaluru and Chennai, SPL is one of South India’s top residential real estate development enterprises. These are India’s two most important residential property markets, and they will continue to grow at a rapid pace.
During the second wave of the pandemic, SPL’s business was seriously harmed, but it is projected to recover in the following quarters. Well-known investors, as well as financial backers who have invested in the company’s projects, back the company. As a result, we recommend that investors leave their money in the market for the long term.
Despite the fact that the issue was reasonably valued, Shriram Properties received a poor listing due to current market conditions. We do not recommend that investors add this company to their portfolio at current levels, given the market’s volatility, as we foresee a further 15% drop in the next sessions.
The US Federal Reserve expects to boost the pace of bond purchases, placing pressure on high-beta sectors like infrastructure and real estate. We expect FIIs to withdraw their money in the coming months.
Short-term investors should avoid adding this stock to their portfolio at this time, while long-term investors should buy it at Rs 75-80.
Mohit Nigam, Head of PMS at Hem Securities
The issue’s pricing was reasonable last week, and it was trading at a 10% premium, but today’s bad market conditions, owing to rising interest rate scenarios and fears of Omicron, have played a crucial part in Shriram Properties’ weak listing.
Fundamentally, the organisation has lost money, is in debt, and has exhibited weak execution capabilities as a result of numerous project delays. In our IPO report, we advised investors to avoid the offer because the firm had no comparative advantage. Investors with exposure to the problem are advised to sell their holdings.
Swastika Investmart’s Head of Research, Santosh Meena
The IPO received minimal interest due to losses in a market where other real estate companies were growing in the prior two years. Only ambitious investors should pick Shriram Properties, while others should consider Sobha, Prestige, or Brigade, as real estate is projected to do better in the coming years.
Short-term investors should set a stop loss at Rs 80 a share on a closing basis, while long-term investors can keep the stock.
Wright Research’s Founder, Sonam Srivastava
Shriram Properties has a strong position in the real estate market, and its two-year negative profitability is comparable to its peers. The initial public offering is priced at twice the book value, which is a fair price.
We believe the real estate sector will continue to thrive, and we recommend that investors purchase the stock. However, investors should be mindful of the Omicron variant’s influence and wait a few quarters to observe how the company operates.
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