SRM Contractors started off its first trading day with a 7% premium on Wednesday (April 3). The stock listed at ₹225 on the BSE, a premium of 7% as against its issue price of ₹210 per share. On the NSE, the stock was listed at a premium of 2.5% at ₹215.25.
This is the first listing in the mainboard segment in the new financial year FY25.
Analysts were expecting a double-digit listing premium given the company’s strong IPO subscription numbers, healthy financial performance, and successful execution of projects in the difficult terrain.
“High subscriptions and significant GMP suggested significant listing gains on the company’s first trading day. While short-term volatility is always possible, SRM Contractors presents a compelling proposition for investors with a long-term perspective,” said Shivani Nyati, Head of Wealth at Swastika Investmart.
Nyati said that SRM Contractors’ outlook is bolstered by several key strengths, including its proven track record of efficiently executing road, tunnel, and slope stabilisation projects within their focused region.
“Owning their equipment and operating an in-house integrated model ensure project control and cost-efficiency. Additionally, SRM Contractors has a history of consistent financial performance and maintains a healthy order book, indicating continued revenue generation and growth potential,” she added.
Vishnu Kant Upadhyay of Master Capital Service said that SRM Contractors is expanding its fleet of machinery and equipment, which will boost its operational efficiency in the upcoming quarters, and its order book is anticipated to grow in FY25 as a result of government infrastructure efforts in J&K, where the company operates.
“The listing view for the IPO is that the investor can hold the stock for long term post listing, Upadhyay said.
SRM Contractors IPO subscription
The ₹130-crore IPO, which kicked off for subscription on March 26 and was available for the public to bid till March 28, was subscribed 86.57 times at close, led by strong support from all kinds of investors.
Non-institutional investors (high networth individuals) took the lead, picking 214.94 times the allotted quota. Qualified institutional buyers bought 59.59 times the reserved portion, while the retail investors booked 46.97 times the portion set aside for them.
SRM Contractors IPO GMP
Ahead of its debut, shares of the company were trading at a premium of ₹95 in the unlisted market, which translated into a listing gain of about 45%.
The grey market is an unofficial platform wherein IPO shares can be bought and sold till the listing.
SRM Contractors IPO size
The maiden public issue was completely a fresh issue of 62 lakh equity shares, aggregating up to ₹130 crore. There was no ‘offer for sale’ component.
SRM Contractors IPO objective
The funds raised from the IPO will be utilised to purchase machinery, support working capital requirements, invest in joint venture projects, pay debt and for general corporate purposes.
SRM Contractors IPO BRLM
Interactive Financial Services acted as the sole book-running lead manager to the IPO while Bigshare Services was the registrar.
Company overview
SRM Contractors is an engineering construction and development company engaged primarily in the construction of roads (including bridges), tunnels, slope stabilisation works and other miscellaneous civil construction activities in the Union Territories of Jammu & Kashmir and Ladakh.
The company undertakes construction works both as an EPC contractor and on an item-rate basis for infrastructure projects. It also does sub-contracting assignments for infrastructure construction projects.
In recent years, Jammu & Kashmir has received a boost in road infrastructure development, following the government’s enhanced focus on improving road infrastructure in the region.
Financials
The company posted a net profit of ₹18.75 crore in FY23, up from ₹17.57 crore. Its revenue rose from ₹263.3 crore in FY22 to ₹300.3 crore.
In the nine-month period of the current fiscal year, net profit stood at ₹21.07 crore on revenue of ₹234.55 crore.
