The Initial Public Offering (IPO) of SRM Contractors has captivated the attention of the investment community, signaling a promising start on its first day of subscription. The engineering firm, known for its expertise in civil construction projects across the Union Territories of Jammu & Kashmir and Ladakh, has seen its IPO fully subscribed within just a few hours of the subscription period opening. The fervent participation from both retail investors and non-institutional investors (NIIs) led to a robust booking, with the overall subscription status reaching 3.56 times according to the Bombay Stock Exchange (BSE) data. This heightened interest underscores the market’s optimism about SRM Contractors’ future prospects.
The breakdown of the subscription figures reveals a compelling story. Retail investors showed a strong inclination towards the offering, subscribing to it 3.55 times. NIIs, on the other hand, displayed even greater enthusiasm, booking their portion 6.26 times. The qualified institutional buyers (QIBs) were not far behind, with their share being subscribed 1.57 times. These figures are indicative of widespread confidence across different investor segments in the potential of SRM Contractors.
Scheduled to close on Thursday, March 28, this IPO stands out as the sole mainboard IPO available for subscription during this shortened trading week. The price band for the offering has been set at ₹200 to ₹210 per share, with a face value of ₹10 each. Investors have the option to bid in multiples of 70 shares, starting with a minimum bid quantity of 70 shares. This structure has been designed to accommodate a broad spectrum of investors, with a minimum of 15% of the issue reserved for NIIs, up to 50% for QIBs, and at least 35% for retail investors.
The focus of SRM Contractors on executing a diverse array of civil construction projects, including road and bridge constructions, tunneling, and slope stabilization efforts, has positioned the firm as a key player in the infrastructure development sector. The company’s robust order book, which boasts contracts worth ₹1199.31 crore as of January 31, 2024, showcases significant growth from previous years. This growth trajectory reflects the company’s expanding project portfolio and operational capabilities. The leadership team behind SRM Contractors, comprising Ashley Mehta, Puneet Pal Singh, and Sanjay Mehta, has steered the company towards achieving noteworthy milestones.
When compared to its peers in the industry, such as Man Infraconstruction Ltd, ITD Cementation India Ltd, Likhitha Infrastructure Ltd, and Udayshivakumar Infra Ltd, SRM Contractors showcases a promising outlook with a competitive edge. This is evident from the industry’s price-to-earnings (P/E) ratios, with SRM Contractors poised to make a significant mark.
On the first day of the IPO, the offering attracted bids for 1,54,64,190 shares against the 43,40,100 shares on offer, as per BSE data. The retail segment, in particular, saw bids for 76,94,960 shares against the 21,70,000 shares available to this group. NIIs demonstrated strong interest with 58,24,140 shares bid against their allocation of 9,30,000 shares. The QIB segment also participated actively, with bids for 19,45,090 shares against their quota of 12,40,100 shares.
The IPO consists of a fresh issue of up to 62,00,000 equity shares, aggregating up to ₹130.20 crore. Notably, there is no offer-for-sale component in this IPO. The proceeds from the offering are earmarked for several strategic initiatives, including meeting working capital requirements, repaying existing secured loans either fully or partially, engaging in project-specific joint ventures, and addressing general corporate purposes. Additionally, a portion of the funds will be allocated for capital expenditures related to the acquisition of machinery and equipment, further bolstering the company’s operational capacity.
Interactive Financial Services Ltd serves as the lead manager for the issue, with Bigshare Services Pvt Ltd acting as the registrar. This strategic partnership is expected to facilitate a smooth and successful IPO process, aligning with the company’s growth objectives.
The Grey Market Premium (GMP) for SRM Contractors’ IPO, a key indicator of market sentiment, stands at +78 today, as reported by investorgain.com. This suggests that shares of SRM Contractors were trading at a premium of ₹78 in the grey market over the upper end of the IPO pricing band. This translates to an estimated listing price of ₹288 per share, marking a 37.14% increase over the IPO price of ₹210. The GMP has been fluctuating over the past six sessions, ranging from 25 to 68, with 25 being the lowest. This variance in GMP reflects the investors’ willingness to pay a premium over the issue price, further highlighting the anticipated strong listing of SRM Contractors on the stock exchange.
In summary, the IPO of SRM Contractors emerges as a notable event in the financial markets, drawing significant interest from a wide spectrum of investors. The strong subscription figures, alongside the optimistic GMP, point towards a positive market reception and the potential for substantial gains post-listing. As investors and market watchers eagerly await the closing of the subscription period and the subsequent listing of SRM Contractors, the IPO signifies a pivotal moment for the company in its growth journey.