Shriram Prop lists at discount

Shriram Properties had a poor listing; as against the IPO price of Rs.118, the stock got listed at Rs.94 on the BSE, a discount of over 20%.

Traders were expecting a discounted listing as the response to the IPO was just about okay. Nowadays, a subscription of around 5-times is looked upon as “weak.” The IPO saw more response from retail investors, whose portion was subscribed 12.72 times, HNIs was 4.82 times and QIBs at 1.85 times.

We had given an “avoid” in the IPO as the PE funds themselves were exiting at a loss via this IPO. In the Analysis we had said, “Cost of acquisition, for selling investors are between Rs. 127-177 per share, implying all 4 funds are part exiting at a hair-cut. The fund with cost of Rs. 127 per share, first invested in the company in Nov 2007, implying loss even after 14 years of holding. Loss after such a long holding period is unheard of, clearly highlighting poor company fundamentals, and acting as a huge deterrent, irrespective of future prospects.”