Jammu & Kashmir-based EPC contractor SRM Contractors’ IPO is set to open on March 26. The public offer is a fresh issue of 62 lakh shares. Ahead of the IPO, the company raised Rs 39.06 crore from three anchor investors.
Here are 10 key things to know before subscribing to the offer:
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1) IPO Dates
The IPO will open for subscription on March 26 and close on March 28, 2024.
2) Price Band
The price band for the issue has been fixed at Rs 200-210 per share.
3) Offer Details
SRM Contractors plans to raise Rs 130.2 crore. The public offer is entirely a fresh issue of 62 lakh shares. The anchor book opened for a day on March 22. The company raised Rs 39.06 crore from three anchor investors. Neomile Growth Fund – Series I was the largest institutional investor in the anchor book, picking 9.05 lakh equity shares worth Rs 19 crore, while Saint Capital Fund, and Astorne Capital VCC – Arven bought 4.77 lakh equity shares each worth Rs 10 crore.
Half of the IPO size has been reserved for qualified institutional buyers, 15 percent for non-institutional investors, and the remaining 35 percent for retail investors.
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4) Objectives of Issue
The company will utilise Rs 31.5 crore of the proceeds to purchase equipment. Rs 46 crore will be set aside as working capital and Rs 10 crore for repaying debt. Further, Rs 12 crore will be invested in project-specific joint ventures and the remaining funds will be for general corporate purposes.
5) Lot Size
Investors can bid for a minimum of 70 equity shares and multiples of 70 after that. Hence the minimum investment by retail investors would be Rs 14,000 (70 (Lot size) x 200 (lower price band)). At the upper end, the bidding amount will increase to Rs 14,700.
6) Company Profile
SRM Contractors primarily engages 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.
7) Financials
SRM Contractors recorded a net profit of Rs 18.75 crore in FY23, up from Rs 17.57 crore. Revenue increased from Rs 263.3 crore in FY22 to Rs 300.3 crore. In the nine months of the current financial year, net profit stood at Rs 21.07 crore on revenue of Rs 234.55 crore. As of December, the company had a loan of Rs 32.74 crore.
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8) BRLMs and Promoters
The book-running lead manager of the IPO is Interactive Financial Services while Bigshare Services is the registrar. The company’s promoters are Sanjay Mehta, Ashley Mehta, and Puneet Pal Singh.
9) Risks
(i) The company’s business is concentrated in Jammu & Kashmir and Ladakh and is exposed to risks emanating from economic, regulatory and other changes in the union territories.
(ii) The company derives a significant portion of its revenues from a limited number of clients. For the nine months ending December 31, 2023, the top five clients contributed 80.77 percent to the total revenue.
10) Listing Date
The basis of allotment will be finalised by April 1, shares will be credited to demat accounts by April 2 and the stock is expected to be listed on the NSE and BSE on April 3, as per the RHP.
