Property Real Estate Developer Shriram registered its shares with a 20 percent discount at the problem price, at Rs 94, in BSE on December 20 in a weak market.
The company’s first public problem has seen a good response from investors by subscribing to 4.6 times over December 8-10. The Shriram Group company mopped RS 600 Crore through public problems on RS 113-118 price ribbons per equity stock.
While Angel One and Choice Broking have a ‘subscription’ rating on this problem, Anand Rathi suggests ‘avoid’ noting that the company has reported net losses since FY20.
Property Shriram posted a loss of Rs 60.03 Crore on Revenue Rs 118.17 Crore in the six months ending September 2021.
In FY21, he reported a loss of Rs 68.17 Crore with RS 86.39 Crore losses a year ago. Revenue from operations dropped to RS 431.5 Crore from RS 571.96 Crore during the same period.
Even though stocks rose to Rs 101, stocks were still trading 14 percent lower than the price of the problem.
So, should the investor come out of stock or hold on to it? This is what analyst says:
Rajnath yadav, research analyst, chosen broking
We have ranked a ‘subscription’ for this problem. However, the request of investors is relatively poor and negative sentiment in a broader market, especially the hardcorm for listings.
With favorable factors such as low home loan interest rates historically, stagnant housing prices, and reducing stamp duty in certain markets, we still maintain a positive view of this sector.
SPL is one of the leading housing real estate development companies in South India, with the presence in Bengaluru and Chennai’s main markets. These two cities are between two main housing housing markets in India and will continue to be among the top cities in terms of growth.
The SPL business is very affected during the second wave of pandemic and, therefore, it is likely to be a better performance in the upcoming quarter. The company is supported by Marquee investors and also has financial investors in its projects. So, we recommend investors to make investments for the medium term.
Likhita Chepa, Senior Research Analyst, Capitalvia Global Research
Property Shriram sees a weak list because of the ongoing market sentiment, although the problem is quite appreciated. Considering volatility in the market, we do not recommend investors to add this stock to their portfolio at the current level because we expect further correction of about 15 percent in the next few sessions.
With the US Federal Reserve plan to increase the pace of bond purchases, we hope FII to withdraw their money in the coming months, because where sectors such as infrastructure and realty can witness some sales pressures.
Short-term investors can avoid adding this stock to their current portfolio, while long-term investors can consider buying this share with the level of Rs 75-80.
Mohit Nigam, Head – PMS, Hem Securities
The price of this problem was quite moderate and traded at premium 10 percent last week but the current adverse market conditions due to the increase in interest rate scenarios and fear of Omicron had played a key catalyst in the list of weak Shriram properties.
Basically, the company has suffered losses, has increased debt and demonstrates weak implementation capabilities due to continuous delay in the completion of the project sometimes. In our IPO report, we suggest investors to avoid this problem because the company does not have a comparative advantage. Investors who have exposure to this problem are advised to get out of their position.
Santosh Meena, Head of Research, Investmart Swastika
The IPO sees the request muted in the back of the loss where other real estate companies are boom in the past two years. In the coming years, real estate tends to perform better, and only aggressive investors are advised to see Shriram properties, while others can choose Sobha, Prestige, or Brigade.
