SRM Contractors Ltd. IPO: Review, Valuation, Date & GMP

SRM Contractors Limited IPO - Complete Overview

Established in 2008, SRM Contractors Limited specializes in the construction of roads (including bridges), tunnels, slope stabilization works, and various other civil construction activities within the Union Territories of Jammu & Kashmir and Ladakh. 

The company engages in both Engineering, Procurement, and Construction (EPC) contracts and item rate projects for infrastructure development.

The company's operations are divided into distinct business verticals:

1. Road Projects: This division focuses on the design, construction, and maintenance of roads and highways, including realignment, widening, upgradation, restoration, strengthening, and improvements, particularly in challenging terrains of Jammu & Kashmir and Ladakh.

2. Tunnel Projects: SRM Contractors undertake the design and construction of new tunnels, cut and cover tunnels for avalanche and slide protection, caverns, as well as upgrades, restoration, strengthening, improvements, and stabilization of existing tunnels in difficult terrains of the Union Territories.

3. Slope Stabilization Works: This involves employing various engineering techniques to solidify and stabilize unstable slopes or those lacking sufficient stability.

4. Other Miscellaneous Civil Construction Activities: The company also undertakes additional construction tasks such as government housing and residential units, drainage works, and irrigation & flood control projects.

The company has completed 37 infrastructure construction projects with a combined contract value of Rs. 77,088.00 lakhs. These projects include 31 road projects, 3 tunnel projects, 1 slope stabilization work, and 2 other miscellaneous civil construction activities. 

Out of these 37 projects, SRM Contractors independently executed 29 infrastructure construction projects, including subcontracting assignments, while 8 projects were carried out through project-specific joint ventures.

As of September 15, 2023, the company employs 293 individuals.

SRM Contractors Limited IPO Overview

SRM Contractors Limited IPO date is slated to be open for subscription from March 26, 2024, to March 28, 2024. This NSE and BSE IPO follows a Book Built Issue IPO.

SRM Contractors Limited IPO price is set in the range of Rs.200 to Rs.210 per share. 

The total issue size of this IPO amounts to Rs.130.20 Cr. The company has allocated 35% to retail investors, 50% to institutional and 15% to non-instituional investors.

 

Company Financial

Compared to previous financial years, SRM Contractors Limited has seen growth in total assets, net worth, and total revenue. The profit after tax and total borrowing has increased.

(Amount in Crore)

Period	31 Mar 2023	31 Mar 2022	31 Mar 2021
Total Assets	137.36	120.22	112.47
Total Revenue	300.65	265.51	161.95
PAT	18.75	17.57	8.27
Net worth	63.16	44.41	26.85
Reserve & Surplus	46.41	42.89	25.32
Total Borrowings	47.16	31.52	31.96

 

Operation-wise revenue break up

(Amount in Lakhs)

Operation	FY 23	FY 22	FY 21
Road Projects	13,532.93	10,277.71	8,729.29
Tunnel Projects	7,822.08	10,857.19	6,742.26
slope stabilisation works	8,390.26	4,904.58	228.71
Other miscellaneous civil Construction Activity	283.80	311.66	305.62

 

 

The Objective of the Issue

The Company will allocate the Net Proceeds from the Issue for the following objectives:

1. Financing capital expenditure needs for acquiring equipment/machinery.

2. Repaying or prepaying, either fully or partially, specific outstanding secured borrowings obtained by the Company.

3. Catering to the working capital needs of the Company.

4. Investing in Project Specific Joint Venture Projects.

5. Addressing general corporate requirements.

 

 

Peers of SRM Contractors Limited IPO

Name of the Company	Face Value (Rs)	EPS (Rs)	P/E Ratio
SRM Contractors Limited	10	90.82	-
Man Infraconstruction limited	2	4.47	46.87
ITD cementation India Limited	1	7.23	46.56
Likhitha Infrastructure Limited	5	15.22	17.42
Udayshivakumar Infra Ltd	10	2.90	21.17

 

Evaluation

The IPO is priced within the range of Rs.200 to Rs.210 per share.

Evaluation of P/E Ratio

• Considering the FY23 EPS of Rs 90.82 from the last year, the resulting P/E ratio is 2.31x.

• Taking into account the weighted EPS of Rs 80.46 for the last three years, the P/E ratio amounts to 2.60x.

Comparative Analysis with Listed Peers

• The industry's average P/E is 32.15x.

As a result, the IPO price range, with a P/E ratio ranging from 2.31x to 2.60x, seems fully priced to the industry average of 32.15x.

 

IPO's Strengths 

• Demonstrated history of effectively executing projects involving roads, tunnels, and slope stabilization in the challenging terrain of the Union Territory of Jammu and Kashmir.

• Effective business strategy of project selection and clustering within the Union Territories of Jammu & Kashmir and Ladakh.

• Persistent emphasis on equipment ownership to ensure operational efficiency.

• Robust financial performance.

• Utilization of an in-house integrated model.

• Seasoned promoters leading a capable management team.

 

 

IPO weaknesses 

• The company's operations are primarily focused on the Union Territory of Jammu & Kashmir and Ladakh, making it vulnerable to risks stemming from economic, regulatory, and other changes within these territories.

• A considerable portion of the company's revenue comes from a small pool of clients, indicating potential dependency risks.

• Litigation proceedings involve the Company, its Promoters, Directors, and Joint Ventures.

• Regulatory compliance necessitates the company to acquire, renew, or maintain statutory permits, licenses, and approvals to sustain its operations.

• Operating within the construction industry, the company faces challenges due to low entry barriers and intense competition.

IPO GMP Today 

The latest GMP of SRM Contractors Limited is Rs.70.

 

SRM Contractors Limited IPO timetable (Tentative)

SRM Contractors Limited IPO is scheduled from March 26 to March 28, 2024, with allotment on April 1, refund initiation on April 2, and listing on April 3, 2024.

Events	Date
IPO Opening Date	March 26, 2024
IPO Closing Date	March 28, 2024
IPO Allotment Date	April 1, 2024
Refund initiation	April 2, 2024
IPO Listing Date	April 3, 2024

 

SRM Contractors Limited IPO Details 

SRM Contractors Limited IPO, with a face value of Rs.10 per share, opens on March 26 and closes on March 28, 2024, offering 6,200,000 shares at Rs.200 to Rs. 210 per share, with a lot size of 70 shares, aiming to raise Rs.130.20 Cr, and will be listed on NSE and BSE.

IPO opening & closing date	March 26, 2024 to March 28, 2024
Face value	₹10 per share
Issue Price	₹200 to ₹210 per share
Lot Size	70 Shares
Price of 1 lot	₹14,700
Issue Size	6,200,000 shares (aggregating up to ₹130.20 Cr)
Fresh issue	6,200,000 shares (aggregating up to ₹130.20 Cr)
Listing at	BSE, NSE
Issue Type	Book Built Issue IPO
Registrar	Bigshare Services Pvt Ltd

 

 

 

SRM Contractors Limited IPO Lot Details 

For SRM Contractors Limited IPO, the retail investor can invest in a minimum of 1 lot (70 shares) at Rs.14,700 and a maximum of 13 lots (910 shares) at Rs.191,100,  while for HNI investors, the minimum investment is 14 lots (980 shares) at Rs.205,800.

Minimum Lot Investment (Retail)	1 lot
Maximum Lot Investment (Retail)	13 lot
Minimum Lot Investment (HNI)	14 lots
Maximum Lot Investment (HNI)	68 lots

 

SRM Contractors Limited IPO Reservation 

Institutional share Portion	50%
Non-institutional share Portion	15%
Retail share Portion	35%

 

 

Promoters and Management of SRM Contractors Limited

• Sanjay Mehta

• Ashley Mehta

• Puneet Pal Singh

Pre-issue Promoter shareholding	99.92%
Post-issue Promoter shareholding

 

SRM Contractors Limited IPO Lead Managers

• Interactive Financial Services Ltd

Dividend Policy

The company has not distributed any dividends in the past, and the potential for future dividend payments depends on the financial performance of the company.

 

 

Conclusion

SRM Contractors Limited offers an exciting opportunity for investors to invest in its upcoming IPO. The company is showing strong growth in its financials performance. Seasoned investors may apply for the IPO after evaluating all the factors for optimal results.

 

Finowings IPO Analysis

Hope you enjoyed the Finowings IPO Analysis. We tried our best to give every required detail about the company that you should know before applying to the IPO. 

You must consult your financial advisor before making any financial decisions. 

To Apply for the IPO, Click Here.

 

To Read the Prospectus of the Company Click Here to Download the DRHP.

 

 

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