Shriram properties IPO, should you hold or sell shriram properties stock after Listing

 Shriram Properties stock strategy after IPO Listing:

After such a long time shriram group is coming up with its new IPO i.e Shriram properties IPO. Brand name of the company is well known in India and in some countries out of India. Shriram group has strong presence in India in financial sector, transpiration industry & small business of real estate sector. Many investors had confusion into their mind when Shriram properties IPO came into the Indian market whether they should subscribe it or not because of many reasons but now if you had subscribed and received allotment of shares then should you hold or sell Shriram properties stock. Before reaching to conclusion we have to understand the company business model.

                                                         Image-source-shriramproperties     

Question:

What does shriram Properties Company does?

Answer:

Shriram properties business strongly attracts business from affordable housing segment. Company construct small & affordable houses & having strong presence into the South India. Company mainly have property & projects into Chennai, Bangalore, Kolkata and Coimbatore. As per company data more than 22,000 families have already residing into the houses built by this small market cap company.  We can say that company have only focus on real estate sector. As per company management, More than 40% sales come from customer referral. It means happy customers of the company gives business to the company.

Question:

What are the Positive about the Shriram properties Company?

Answer:

As per our research, we have found some of the main positive points about this company.

1) Shriram properties is a group company of shriram group. It helps to attract new investors for this company & Shareholders may trust on the company strong management.

2) Shriram properties have investment partners like ICICI Prudential, Tata Capital, Sun apllo & TPG. Such a big investment companies also gives more confidence for making investment into this company.

3) Shriram properties IPO price band 113rs to 118rs with the face value of 10rs, Valuations at these Price band is reasonably priced in but still we may see some profit after IPO liting because of Small ticket size of this stock. Otherwise Company is coming up with bit higher valuations.

4) The south based real estate developers companies are in more demand because in the south india property demand is expected to grow in the coming months or years. Also real estate companies are into more focus from last few months & many of real estate companies stocks have already given multibagger returns.

5) Company is mobilizing 600crore from this issue out of which 350 crore means rest of the company will change the picture of the company balance sheet because as per company management, out of 600 crore, Company will use 200cr for repayments debit . Nearly 650cr debit is on the books of the shriram properties balance sheet. Reducing the debit from balance sheet is always good sign. Currently debit equity ratio is nearly 0.8 times but after repayment of debit it will come to 0.4 times.  

6) Shriram properties come in top 5 real estate residential companies from south India. Almost 29 Projects Company had already completed. Nearly 16.7 billion Sq. feet of areas which mainly includes residential, commercial & Office space?

7) Shriram properties IPO had subscribed 4.60 times  out of which Non institutional investors portion subscribed 4.82 times & qualified institutional buyers (QIBs) had subscribed  1.85 times but  QIB allotted quota has to get at least 90% subscription.  Company had reserved 75% of the offer size for QIBs &10%t for retail investors,  remaining 15% for NII’s. It clearly shows that this IPO had received mixed reaction but still Issue had subscribed fully. Retail Investors interest is more in focus due to small ticket size of stock.

Question:

What are the negative points about the shriram properties?

Answer:

1) Shriram properties company size is very small nearly 2000cr. If company belongs to shriram group & having such a small size from last many years. It creates a question into the mind of the investors & Company share holders.

2) There are many other real estate companies are running their businesses in the same state with large market cap.

3) Company revenues are decreasing since FY19 to FY21. Company had recorded total revenues of 650cr in FY19, 572cr in FY20 & 432cr in FY21. If we will talk about H1FY22 then revenues are 118cr only. Instead of growth in the revenues, company revenues are decreasing YOY basis.

4) From Last 4 or 5 years, Shriram properties are recording losses YOY basis. In FY19, there was loss of nearly 50cr, in FY20, loss was nearly 87cr & In FY21, and company had reported total loss of 68cr. It means that company is under the loss instead of making profit. It is not a good sign for shareholders & Investors.

Question:

Should you buy or sell Shriram properties stock?

Answer:

As per our research, Company management is strong & we may see some speculation into the stock in the coming days because of small ticket size price of the stock but as of now company is into the loss but if anyone want to take a bet on the “Shriram group” of company then It is better to start accumulate the stock at the lower levels for covering the risk factors. If Luckily, you get IPO listing gains into the Shriram properties then try to book profit on higher levels & if Shriram properties stock will list at discount price then it will be better to start accumulate the stock in small number of sets. We can say that shriram properties stock will be for “High risk & moderate returns” investors.

The only positive about the shriram properties is that this company is into the strong management hands & we may see turn around in the coming years but it will be a long term bet with high risk taking ability.

Question:

What are the long term price targets of Shriram properties stock?

Answer:

As we have already discussed above that in last few years company revenues decreased & it is a still loss making company. So if you have patience & you can hold shriram properties  stock for 1 to 2 years of point of view then 150rs+ price targets are expected in long term. We will suggest you to hold shriram properties stock with the stoploss of 97.50rs closing basis. Otherwise wait for some correction to come into the stock after its IPO listing & start accumulate this stock. Traders may follow the strict stoploss & Try to book some profit on higher level if in any case it comes after listing or in the coming days.

Recommendation: 

Long term Investors can "Hold" & can accumulate at lower levels with some risk taking ability.