Shares of SRM Contractors, a Jammu & Kashmir-based construction company, marked their market debut on April 3, listing at a 2 percent premium on the National Stock Exchange (NSE) at Rs 215. This listing followed a period of anticipation, with the company’s shares commanding a high grey market premium (GMP) of Rs 95, indicating a strong opening.
However, despite the optimistic signs before the listing, the debut was dampened by weak market sentiment. This outcome came as a surprise, given the significant investor interest generated by SRM Contractors’ Rs 130-crore initial public offering (IPO), which witnessed an impressive subscription of 86.57 times.
Analysts point to various strengths in SRM Contractors’ profile. The company has demonstrated a proven track record in efficiently executing projects in road construction, tunneling, and slope stabilization, particularly within its focused region. Furthermore, SRM Contractors’ ownership of equipment and its operation of an in-house integrated model contribute to enhanced project control and cost-efficiency.
“SRM Contractors has consistently delivered strong financial performance and maintains a robust order book, indicating its ability to generate sustained revenue and future growth potential,” noted Shivani Nyati, Head of Wealth at Swastika Investmart Ltd. Despite potential short-term volatility, Nyati believes that SRM Contractors presents an attractive investment opportunity for investors with a long-term perspective.
SRM Contractors has witnessed a substantial surge in its order book, reaching Rs 1,199.32 crore, reflecting an impressive 177 percent increase from FY21 to FY23. The company’s proactive measures to expand its fleet of machinery and equipment are expected to further enhance its operational efficiency in the coming quarters.
According to Vishnu Kant Upadhyay, Assistant Vice President at Master Capital Service Ltd., SRM Contractors’ order book is poised for continued growth in FY25, driven by government infrastructure initiatives in Jammu & Kashmir, where the company predominantly operates. “Investors can consider holding the stock for the long term,” he remarked on January 31, 2024.
This positive outlook underscores SRM Contractors’ strong positioning to capitalize on the anticipated infrastructure developments in its operating region, presenting a promising opportunity for investors seeking long-term growth prospects.
Sources: moneycontrol.com
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