Economy

Shriram Properties shares are available at a 20% discount. What are options for investors now?

Shriram Properties, a real estate developer, listed its shares on the BSE on December 20 at a 20% discount to its issue price, at Rs 94, in a weak market.

Investors responded well to the company’s first public offering, with 4.6 times subscription between December 8 and 10. The public offering raised Rs 600 crore for the Shriram Group at a price range of Rs 113-118 per equity share.

While Angel One and Choice Broking gave the stock a’subscribe’ rating, Anand Rathi advised investors to ‘avoid’ it, citing the company’s net loss since FY20.

In the six months ended September 2021, Shriram Properties lost Rs 60.03 crore on revenue of Rs 118.17 crore.


We maintain a positive outlook on the sector due to favourable factors such as historically low home loan interest rates, stagnant residential prices, and stamp duty reductions in certain markets.

SPL is one of South India’s leading residential real estate development companies, with offices in Bengaluru and Chennai. These two cities are India’s two most important residential housing markets, and they will continue to be among the fastest-growing.

SPL’s business was severely impacted during the pandemic’s second wave, but it is expected to perform relatively better in the coming quarters. The company is backed by well-known investors, as well as financial backers who have invested in its projects. As a result, we advise investors to keep their money in the market for the medium term.

Despite the issue being fairly valued, Shriram Properties saw a weak listing due to the current market sentiment. Given the market’s volatility, we do not recommend that investors add this stock to their portfolio at current levels, as we expect a further 15% correction in the coming sessions.

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We expect FIIs to pull out their money in the coming months as the US Federal Reserve plans to increase the pace of bond purchases, putting pressure on high-beta sectors like infrastructure and real estate.

Short-term investors should avoid adding this stock to their portfolio right now, while long-term investors should consider purchasing it at Rs 75-80.
Hem Securities’ Head of PMS, Mohit Nigam

Shriram Properties Shares
Shriram Properties Shares

The issue’s pricing was moderate, and it was trading at a 10% premium last week, but today’s adverse market conditions, owing to rising interest rate scenarios and fears of Omicron, have played a key role in Shriram Properties’ weak listing.

Fundamentally, the company has lost money, has a growing debt load, and has demonstrated poor execution capabilities due to frequent delays in project completion. We advised investors to avoid the issue in our IPO report because the company has no comparative advantage. It is recommended that investors who have exposure to the issue sell their holdings.


Swastika Investmart’s Head of Research, Santosh Meena

On the back of losses in a market where other real estate companies were booming in the previous two years, the IPO saw a low demand. Real estate is expected to perform better in the coming years, and only aggressive investors should consider Shriram Properties, while others should consider Sobha, Prestige, or Brigade.

Short-term investors should take a stop loss at Rs 80 on a closing basis, while aggressive investors can hold the stock for the long term.


Wright Research’s Founder, Sonam Srivastava

Shriram Properties is well-positioned in the real estate sector, and its two-year negative profitability is in line with its peers. The IPO is priced at twice the book value, which is a reasonable price.

We expect the real estate sector to grow, and we would advise investors to buy the stock. However, investors should be wary of the impact of the Omicron variant, and wait a few quarters to see how the company performs operationally.
Disclaimer: The opinions and investment advice expressed by Moneycontrol.com’s investment experts are their own, not those of the website or its management. Before making any investment decisions, Moneycontrol.com recommends that users consult with certified experts.

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