Please refer to important disclosures at the end of this report
1
Shriram Properties Limited
IPO NOTE Shriram Properties Limited
December 07, 2021
Shriram Properties Limited was incorporated in 2000, company is a group
company of Shriram Group. 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. Shriram Properties is
among the Top-5 residential real estate developers in South India in terms of the
number of units launched since 2015. Company focus markets are Bengaluru and
Chennai, along with this company has a presence in Kolkata and Hyderabad.
Positives
(a) Good Launch Pipeline – Company having a saleable area of 26.3
msf(million square feet) under ongoing projects and 8.27 msf project under
development. (b). The company is part of the Shriram Group and backed by
marquee investors like TPG, Tata Opportunities Fund, Walton Street. (c).
Company having a strong execution track record of completing the project and
delivering the project on time.
Investment concerns: (a) Increase in competition, Bangalore market is the key
market for Shriram Properties Ltd and we have seen an increase in competition in
the Bangalore market. (b) Company not have much completed inventory, so
upcoming sales will be dependent on the new launch of projects and it will take
time to launch new projects. (c) Out of 26 ongoing projects, 18 projects are based
in Bangalore market, any change in rule and regulation will impact the company.
Outlook & Valuation: Based on H1FY2022 numbers, the IPO is priced at a Price to
Book value of 2.28 times at the upper price band of the IPO, which is in line with
the listed peer group. Company is one of the leading residential real-estate
developers in south India and focuses on mid-market and affordable housing
categories. We believe that the company has strong track record of delivering the
project on time and can maintain strong execution which will get reflected in the
pre-sales numbers going ahead. Hence, we are assigning a “SUBSCRIBE”
recommendation to the Shriram Properties Limited IPO.
Key Financials
Y/E March (₹ cr)
FY19
FY20
FY21
H1FY22
Net Sales
650.1
571.9
431.4
118.1
% chg
-
(12)
(24.6)
-
Net Profit
48.9
(86)
(67.8)
-59.9
% chg
-
(276)
(21.2)
-
EBITDA (%)
12.3
15.8
28.1
31.3
EPS (as stated)
3.4
(5.8)
(4.6)
(4.6)
P/E (x)
34.9
-
-
-
P/BV (x)
1.8
2.0
2.1
2.3
EV/EBITDA
24.4
20.5
14.6
24.4
EV/Sales
3.0
3.2
4.1
7.6
Source: Company, Angel Research
SUBSCRIBE
Issue Open: December 08, 2021
Issue Close: December 10, 2021
Shriram Properties Limited | IPO Note
December 07, 2021
2
Company Background
Shriram Properties Limited was incorporated in 2000, company is a group
company of Shriram Group. 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.
Shriram Properties is among the Top-5 residential real estate developers in
South India in terms of the number of units launched after 2015. The
company 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.
Company focus markets are Bengaluru and Chennai, along with this company
has a presence in Kolkata and Hyderabad markets. The Company holds 197
acres of land parcel in Kolkata with a development potential of 21 Msf (Million
square feet).
As of H1FY2022, the company has 29 Completed Projects, representing 16.76
million square feet of Saleable Area, out of which 24 Completed Projects are in
Bengaluru and Chennai market, which accounts for 90.56% of Saleable Area.
Companies 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.
Issue Details –
The issue comprises of new issue of ₹250 crores and offer for sale of
₹350Cr. With the IPO price band of ₹113-₹118.
Pre & Post Shareholding
(Pre-issue)
(Post-issue)
Particular
No of shares
%
No of shares
%
Promoter
4,74,58,070
31.98%
4,74,58,070
28.0%
Public – Investor Selling Shareholders
9,96,45,055
67.14%
5,21,82,915
41.3%
Public - Other
13,08,323
0.88%
6,99,84,039
30.8%
Total
14,84,11,448
100.0%
16,96,24,024
100.0%
Source: Company, Angel Research
Shriram Properties Limited | IPO Note
December 07, 2021
3
Objectives of the Offer
Repayment of certain borrowings availed by the company or subsidiaries.
General Corporate Purposes.
Key Management Personnel
M Murali is the Chairman and Managing Director and individual Promoter of
the company. He has over 17 years of work experience with the company and
was first appointed as a Director of the company on March 30, 2003.
S Natarajan is the Non-Executive Director of the company. He is on the board
of various other companies, such as Binny Mills Ltd, Calcom Credit and
Holdings Pvt Ltd, Envestor Ventures Ltd, Integrated Enterprises (India) Pvt
Ltd, Sipping Spirits Pvt Ltd etc. He has been associated with the Shriram
group for over 17 years and has been a Director of the company since March
30, 2003.
Raphael Dawson is a Non-Executive Nominee Director of the company. He has
more than 15 years of work experience and is currently a Principal with
Walton Street Capital, LLC. He has been a Director of the company since
March 14, 2014.
Gopalakrishnan J is the Executive Director and Group CFO of the company. He
has more than 28 years of experience in the field of finance, mergers and
acquisitions, corporate restructuring, debt and equity, capital markets
financing and debt financing. He joined the company on April 2, 2018.
K.R Ramesh is the Executive Director – Operations of the company. He has
many years of experience in the field of accounting and finance. He joined the
company on August 8, 2007.
Krishna Veeraraghavan is the Director – Operations & Chief Operating Officer
(Bangalore) of the company. He has more than 30 years of experience in the
field of construction, engineering and construction management. He has been
working with the company since June 12, 2014.
Shriram Properties Limited | IPO Note
December 07, 2021
4
Consolidated Profit & Loss account
Y/E March (₹ cr)
FY19
FY20
FY21
H1FY22
Total operating income
650.1
571.9
431.4
118.1
% chg
-
(12)
(24.6)
-
Total Expenditure
644
541
380
118
Land & Material cost
485
352
239
60
Employee Benefit Expense
78
85
64
35
Other Expenses
80
104
78
23
EBITDA
6
31
51
0
% chg
-
378
67
-
(% of Net Sales)
1.0
5.4
11.9
0.1
Depreciation& Amortisation
5.2
6.4
6.5
3.4
EBIT
1.2
24.4
44.8
(3.3)
% chg
-
1,868
84
-
(% of Net Sales)
0.2
4.3
10.4
-
Interest & other Charges
105
123
125
64
Other Income
73.6
59.8
69.8
36.9
(% of Sales)
11.3
10.5
16.2
31.2
Exceptional items
122.3
(1.5)
(1.1)
(3.9)
Profit /(loss) before tax and share of
loss in joint ventures
92
(40.4)
(11.8)
(34.2)
Share of loss of joint ventures
(9.0)
(40.9)
(33.1)
(18.4)
PBT
83.0
(81.3)
(44.9)
(52.6)
(% of Net Sales)
12.8
(14.2)
(10.4)
(44.5)
Tax
34.1
4.7
22.9
7.3
PAT (reported)
48.9
(86.0)
(67.8)
(59.9)
% chg
-
-
(21.2)
(11.7)
(% of Net Sales)
7.5
(15.0)
(15.7)
(50.7)
EPS (as stated)
3.38
(5.8)
(4.6)
(4.6)
% chg
-
-
(20.7)
-
Source: Company, Angel Research
Shriram Properties Limited | IPO Note
December 07, 2021
5
Consolidated Balance Sheet
Y/E March (₹ cr)
FY19
FY20
FY21
H1FY22
SOURCES OF FUNDS
Equity Share Capital
148
148
148
148
Other equity
822
746
679
619
Shareholders Funds
970
894
827
767
Total Loans
259
154
97
97
Other liabities
3.7
4.4
4.4
4.9
Total Liabilities
1,233
1,053
929
869
APPLICATION OF FUNDS
Net Block
68
81
75
73
Current Assets
2,849
2,884
2,838
2,900
Sundry Debtors
210
165
132
108
Cash &Bank Balance
56
44
81
42
Other Assets
203
209
275
310
Current liabilities
2,133
2,364
2,370
2,424
Net Current Assets
716
520
468
476
Other Non Current Asset
448
451
385
319
Total Assets
1233
1053
929
869
Source: Company, Angel Research
Shriram Properties Limited | IPO Note
December 07, 2021
6
Key Ratios
Y/E March
FY19
FY20
FY21
H1FY22
Valuation Ratio (x)
P/E (on FDEPS)
34.9
(20.3)
(25.7)
(25.7)
P/CEPS
32.3
(21.9)
(28.5)
(30.9)
P/BV
1.8
2.0
2.1
2.3
EV/Sales
3.0
3.2
4.1
7.6
EV/EBITDA
24.4
20.5
14.6
24.4
Per Share Data (Rs)
EPS (fully diluted )
3.38
(5.8)
(4.6)
(4.6)
Cash EPS
3.7
(5.4)
(4.1)
(3.8)
Book Value
65.5
60.4
55.9
51.8
DPS
-
-
-
Number of share
14.81
14.81
14.81
14.81
Source: Company, Angel Research
Consolidated Cash Flow Statement
Y/E March (₹ cr)
FY19
FY20
FY21
H1FY22
Restated Profit before tax
82.9
(81.6)
(45.2)
(52.7)
Depreciation
5.2
6.4
6.5
3.4
Change in Working Capital
(34.2)
7.5
126.3
(34.0)
Interest Expense
105.1
123.1
125.3
63.9
Direct Tax Paid
(24.4)
(9.9)
(1.1)
0.2
Others
(57.0)
147.2
117.1
58.9
Cash Flow from Operations
(179.2)
129.1
147.6
54.9
(Inc.)/ Dec. in Fixed Assets
(40.2)
(16.5)
(0.8)
(0.0)
Loans given to joint ventures
(69.1)
(28.8)
(33.3)
(7.4)
Mutual Fund
129.3
157.4
41.4
0.2
Interest received
1.1
1.1
0.67
0.24
Other
152.8
(20.4)
(0.5)
(0.2)
Cash Flow from Investing
173.9
92.8
7.5
(7.2)
Proceeds from Long Term Borrowing
105.4
(181.8)
(18.2)
(34.2)
Dividend paid on equity shares
(113.4)
(105.4)
(73.8)
(52.7)
Others
1.3
59.9
(26.3)
(0.2)
Cash Flow from Financing
(6.7)
(227.3)
(118.3)
(87.1)
Inc./(Dec.) in Cash
(12.2)
(5.4)
36.8
(39.3)
Opening Cash balances
49.6
41.0
42.7
79.2
Closing Cash balances
41.0
42.7
79.2
39.8
Source: Company, Angel Research
Shriram Properties Limited | IPO Note
December 07, 2021
7
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