During the two-day IPO period, SRM Contractors witnessed significant enthusiasm from both retail and non-institutional investors (NIIs). The subscription window, which commenced on Tuesday, March 26, concludes today, Thursday, March 28.
As per data from the BSE, the subscription status of the SRM Contractors IPO stood at 17.42 times on the second day. Notably, the NII portion was oversubscribed by 45.51 times, while the retail portion garnered a subscription of 13.95 times. Qualified institutional buyers (QIBs) subscribed to the IPO 2.41 times over.
On the first day of the IPO, the overall subscription reached 3.56 times, indicating robust initial interest from investors.
The price band for the SRM Contractors IPO has been disclosed, spanning from Rs 200 to Rs 210 per share, with a nominal value of Rs 10 per share. Investors are required to place bids for a minimum of 70 shares, with the option to bid in multiples of 70 shares.
In terms of allotment, a minimum of 15% of the shares have been earmarked for Non-Institutional Investors (NIIs), while up to 50% of the shares have been reserved for Qualified Institutional Buyers (QIBs). Additionally, a minimum of 35% of the shares have been designated for retail investors, ensuring equitable participation in the IPO.
The SRM Contractors IPO witnessed a strong start as it secured ₹39 crore from anchor investors on Friday, March 22, reflecting early enthusiasm among investors.
Allocation of SRM Contractors IPO shares is tentatively scheduled for Monday, April 1, with shares expected to be credited to investors’ demat accounts on Tuesday, April 2, which is also the refund day. Market debut for SRM Contractors’ shares is projected to take place on Wednesday, April 3, on both the BSE and NSE.
Specializing in civil construction projects, SRM Contractors is actively engaged in various infrastructure development projects in the Union Territories of Jammu & Kashmir and Ladakh. Its extensive portfolio encompasses the construction of highways, bridges, tunnels, slope stabilization projects, and other significant ventures.
With its technical proficiency in tackling the challenging terrains of Jammu & Kashmir and Ladakh, SRM Contractors has emerged as a key player in the region’s infrastructure development landscape.
SRM Contractors IPO: Offering Details and Utilization of Proceeds
The SRM Contractors IPO entails a fresh issue of up to 62,00,000 equity shares, amounting to a total value of ₹130.20 crore. Notably, there is no offer-for-sale component included in this offering.
The net proceeds from the IPO are earmarked for various purposes, including meeting working capital requirements, fully or partially repaying existing secured loans, participating in project-specific joint ventures, and addressing general corporate needs. Additionally, funds will be allocated towards capital expenditures associated with the acquisition of machinery and equipment.
Facilitating the IPO process, Bigshare Services Pvt Ltd serves as the registrar, while Interactive Financial Services Ltd has been appointed as the book running lead manager for the SRM Contractors IPO.
SRM Contractors IPO Grey Market Premium Soars to +115
Today, the Grey Market Premium (GMP) for the SRM Contractors IPO surged to +115, indicating that SRM Contractors shares were trading at a premium of ₹115 in the grey market, as reported by investorgain.com.
Market expectations suggest that the anticipated listing price for SRM Contractors shares stands at ₹325 per share, representing a substantial 54.76% increase over the IPO price of ₹210. This calculation considers the upper end of the IPO pricing band and the current premium observed in the grey market.
With the IPO GMP trending higher and reflecting robust activity over the past ten sessions in the grey market, analysts at investorgain.com project a range of GMP from ₹25 to ₹115, indicating strong anticipation for the listing of SRM Contractors shares.
SRM Contractors IPO Review by Hem Securities
Hem Securities offers a comprehensive analysis of the SRM Contractors IPO, which is priced in the range of ₹200-210 per share, translating to a profit-and-loss multiple of 17x based on the annualized 9-month FY24 PAT basis.
Acknowledging the challenging terrain of the Jammu and Kashmir union territory, SRM Contractors has demonstrated a commendable track record in efficiently executing projects involving roads, tunnels, and slope stabilization. The company’s strategic approach involves the careful selection and clustering of projects within the union regions of Jammu & Kashmir and Ladakh.
The brokerage highlights SRM Contractors’ consistent focus on equipment ownership, coupled with robust financial performance over the past three fiscal years. Moreover, the company operates through an in-house integrated model and boasts an experienced management team led by strong promoters.
Taking into account these factors, Hem Securities recommends a “Subscribe” rating for the SRM Contractors IPO, indicating confidence in the company’s growth prospects and operational capabilities.
SRM Contractors IPO Review by GEPL Capital
GEPL Capital presents a favorable assessment of SRM Contractors, highlighting its position as a leading construction company specializing in road, bridge, tunnel, and slope stabilization projects in Jammu & Kashmir and Ladakh.
The brokerage underscores SRM Contractors’ impressive financial performance from FY21 to FY23, characterized by a 22% Compound Annual Growth Rate (CAGR) in revenue, a 31% CAGR in Profit After Tax (PAT), and consistent attainment of double-digit margins. Additionally, as of December 2023, the company boasts a substantial order book amounting to ₹713 crore, ensuring medium- to long-term growth prospects.
Assessing the IPO price in relation to the company’s earnings, GEPL Capital notes that the issue is priced at a Price-to-Earnings (P/E) ratio of 17.15x based on the annualized FY24 earnings and post-IPO paid-up equity capital. In comparison to industry peers, the issue appears to be fairly priced.
Considering these factors, GEPL Capital recommends a “Subscribe” rating for the SRM Contractors IPO, expressing confidence in the company’s growth trajectory and valuation attractiveness.
Sources: livemint.com
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