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. They are 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 Bangalore, Chennai and Hyderabad. They are also present in the mid-market premium and luxury housing categories as well as commercial and office space categories in the core markets SPL 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. They commenced operations in Bengaluru in the year 2000 and have since expanded their presence to other cities in South India, i.e., Chennai, Coimbatore and Visakhapatnam. In addition, SPL also have presence in Kolkata in East India, where SPL are developing a large mixed-use project. Bengaluru and Chennai are two key markets for them. These cities are among two key residential housing markets in India, contributing to approximately 29.3% of the launches in India between the calendar year 2012 and the third quarter of calendar year 2021, and 28.7% of the sold inventory in India between calendar year 2019 and the third quarter of the calendar year 2021. As of September 30, 2021, they have 29 Completed Projects, representing 16.76 million square feet of Saleable Area, out of which the 24 Completed Projects in the cities of Bengaluru and Chennai accounted for 90.56% of the Saleable Area. Further, 83.69% of the total Saleable Area for Completed Projects were in the mid-market category and affordable housing category (with mid-market and affordable categories accounting for 51.44% and 32.25% respectively), and the remainder in the commercial and office space and luxury housing categories, as of September 30, 2021. Additionally, plotted developments accounted for 33.41% and 34.67% of sales volumes during the six months ended September 30, 2021 and the Financial Year 2021, respectively. In addition, as of September 30, 2021, they have 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. The portfolio consists of 26 Ongoing Projects, five Projects under Development and four Forthcoming Projects, which account for 56.28%, 17.71% and 26.01% of the total estimated Saleable Area, respectively, as of September 30, 2021. Further, across these projects, the mid - market category and affordable housing category accounted for an aggregate of 71.48% of the total estimated Saleable Area (with mid-market and affordable housing accounting for 35.67% and 35.80%, respectively), of the total estimated Saleable Area, as of September 30, 2021. Bengaluru and Chennai accounted for 67.15% of the total estimated Saleable Area, as of September 30, 2021. In addition, as of September 30, 2021, they have Land Reserves of approximately 197.47 Acres, with a development potential of approximately 21.45 million square feet of estimated Saleable Area. As per financial performance, SPL has posted total income/net profits of Rs 723.78 Cr / Rs 48.79 Cr (FY19), Rs 631.84 Cr / Rs (86.39) Cr (FY20), Rs 501.31 Cr / Rs (68.18) Cr (FY21) and Rs 155.15 Cr / Rs (60.03) Cr ( H1FY22). So company has shown declining Trends in sale and it was due to pandemic. As life is coming to normal, we may see sales at pre-pandemic level. Company has posted an average EPS of Rs. (3.67) and average RoNW of 0.86% for last 3 fiscals. Issue is priced at a P/BV of 2.29 as per NAV of 51.53 on 30.09.21. As company is making losses, so there is no measure to check, if it's fairly priced or not, but on P/B ration, company looks reasonably priced. As per RHP, Comparison between listed peers are shown in above table. On BRLM's front, three lead managers are associated with this IPO, and have handled around 79 IPOs in last three fiscals. From last 10 IPOs, two is opened below issue price and remaining are opened above issue on the day of listing. As of now, five are trading below issue price and other are trading above issue price. ( As on 30.11.21) As per financials, SPL has shown poor results, and posted losses since FY20 which is due to current pandemic situation. It's expected Real Estate sector will perform well in upcoming years and current trend showing worst phase had been passed. There are so many listed players of Real Estate sector and there is nothing x-factor in this company except the Brand of Shriram group. Performance of BRLM is average. So we give NEUTRAL rating to this IPO.
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