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21 March 2024

SRM Contractors IPO

SRM Contractors is set to launch an IPO with a total value of ₹130.20 crores, exclusively consisting of a fresh issue of 0.62 crore shares. The subscription window for this IPO is scheduled from March 26, 2024, to March 28, 2024, with the allotment expected by April 1, 2024. The shares are poised for listing on both the BSE and NSE on April 3, 2024.

Detail	Information
Price Band	₹ 200 to ₹ 210 per share
Minimum Lot Size	70 Shares
Minimum Investment for Retail	₹14,700
sNII Minimum Investment	14 lots (980 shares) =₹ 205,800
bNII Minimum Investment	69 lots (4,830 shares) =₹ 1,014,300
Book Running Lead Manager	Interactive Financial Services Ltd
Registrar	Big share Services Pvt Ltd
Listing At	BSE,NSE

The IPO allocation is categorized as follows,with a portion reserved for anchor investors who have already committed Rs39.06 crore

Investor Category	Shares Offered	Percentage of Net Offer
QIB	Not more than 50% of the Net offer	-
Retail	Not less than 35% of the Offer	-
NII(HNI)	Not less than 15% of the Offer	-

SRM Contractors, led by promoters Sanjay Mehta,Ashley Mehta,and Puneet Pal Singh,specializes in the construction and development of roads,tunnels,slope stabilization works,and other projects in Jammuand Kashmir and Ladakh.As of January 31, 2024, the company boasts completion of 37 infrastructure construction projects. Financial performance highlights include.

Financial performance highlights include

Period Ended	Assets (₹ Crore)	Revenue (₹ Crore)	Profit After Tax (₹Crore)	Net Worth (₹ Crore)
Dec 31, 2023	168.87	242.28	21.07	37.24
Dec 31, 2023	137.36	300.65	18.75	63.16
Mar 31, 2022	120.22	265.51	17.57	44.41
Mar 31, 2021	112.47	161.95	8.27	26.85

Key performance indicators (KPIs) as of December 31, 2023, showcase a market capitalization of Rs 481.83 Cr, among other metrics reflecting the company's operational efficiency and financial health.

The IPO aims to fund capital expenditure for equipment/machinery purchase, repay/prepay certain outstanding secured borrowings, support working capital needs, invest in project-specific joint venture projects, and for general corporate purposes. Considering the company's steady growth in specialized engineering construction and a significant order book, the IPO presents a medium to long-term investment opportunity, despite being fully priced based on FY24 annualized earnings. Potential investors should note the lead manager's track record when considering their investment decision.

Financial Highlights

Financial Aspects	Dec 2023 (₹ Crore)	Mar 2023 (₹ Crore)	Mar 2022 (₹ Crore)	Mar 2021 (₹ Crore)
Assets	168.87	137.36	120.22	112.47
Revenue	242.28	300.65	265.51	161.95
Profit After Tax	21.07	18.75	17.57	8.27
Net Worth	37.24	63.16	44.41	26.85

Key Performance Indicators (As of Dec 31, 2023)

KPI	Value
ROCE	29.43%
Debt/Equity	0.5
RoNW	25.02%
P/BV	4.17
PAT Margin	8.98%

IPO Details

IPO Specifics	Details
IPO Date	March 26, 2024, to March 28, 2024
Listing Date	April 3, 2024
Price Band	₹200 to ₹210 per share
Lot Size	70 Shares
Minimum Investment	₹14,700 for retail investors
sNII Minimum Investment	₹205,800 for 14 lots (980 shares)
bNII Minimum Investment	₹1,014,300 for 69 lots (4,830 shares)
Lead Manager	Interactive Financial Services Ltd
Registrar	Bigshare Services Pvt Ltd
Listing Platforms	BSE, NSE

Reservation Details

Investor Type	Reservation	% of Total Issue
QIB	Not more than 50%	50%
Retail	Not less than 35%	35%
NII (HNI)	Not less than 15%	15%

Objectives of the Issue

1. Capital Expenditure: Funding requirements for purchasing equipment and machinery.
2.Debt Repayment: Full or part repayment/prepayment of certain outstanding secured borrowings.
3. Working Capital: Funding the company's working capital requirements.
4. Project Investments: Investment in project-specific joint venture projects.
5. General Corporate Purposes: Addressing other general corporate expenses.

Given SRM Contractors Limited's solid performance and future prospects underscored by its significant order book, the IPO presents a potential opportunity for investors. However, investors should also consider the full pricing of the issue relative to its annualized FY24 earnings and weigh the lead manager's historical performance before making an investment decision. This approach ensures a balanced view, aligning expectations with the company's growth trajectory and market dynamics.

FAQs for SRM Contractors IPO

What is the SRM Contractors IPO?

SRM Contractors IPO is a public offering where the company plans to raise ₹130.20 crores through the sale of 0.62 crore shares. The price band is set between ₹200 to ₹210 per share.
When does the SRM Contractors IPO open and close?

The IPO opens on March 26, 2024, and closes on March 28, 2024.
Where will SRM Contractors be listed?

The shares will be listed on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) on April 3, 2024.
How can I apply for the SRM Contractors IPO?

Investors can apply for the IPO through their trading account or bank that offers IPO application services, using either the ASBA (Application Supported by Blocked Amount) or UPI mechanism for retail investors.
What is the lot size for the SRM Contractors IPO?

The minimum lot size for this IPO is 70 shares, translating to a minimum investment of ₹14,700 at the lower price band.
Who are the promoters of SRM Contractors?

The promoters are Sanjay Mehta, Ashley Mehta, and Puneet Pal Singh.
What are the main business activities of SRM Contractors?

SRM Contractors is primarily engaged in the construction and development of roads (including bridges), tunnels, slope stabilization works, and other construction activities in the Union Territories of Jammu and Kashmir and Ladakh.
What is the company's financial performance?

For the period ended December 31, 2023, SRM Contractors reported a revenue of ₹242.28 crore and a profit after tax of ₹21.07 crore.
What are the objectives of the issue?

The net proceeds from the issue are intended for funding capital expenditure requirements, repaying certain outstanding secured borrowings, funding working capital requirements, investment in project-specific joint venture projects, and for general corporate purposes.
How has the company priced its IPO?

Based on the annualized earnings of December 31, 2023, the issue appears fully priced with a P/E ratio at the upper band of 17.15, considering the post-issue EPS of ₹12.24.
Is it advisable to invest in SRM Contractors IPO?

The IPO may appeal to investors looking for opportunities in specialized engineering construction sectors. However, it's essential to consider the fully priced nature of the issue and evaluate the lead manager's track record alongside the company's future growth prospects and the current market conditions before making an investment decision.