SRM Contractors Limited IPO Details

Type: Main Board IPO
Issue Size: ₹130.20 Crore
Fresh Issue: Entirely fresh issue of 6,200,000 equity shares
Price Band: ₹200 – ₹210 per share
Minimum Order Quantity: 70 Shares
Issue Open Date: March 26, 2024 (Open)
Issue Close Date: March 28, 2024 (Open)
Expected Listing Date: April 3, 2024 (Tentative)
Registrar: Bigshare Services Pvt Ltd
BSE Code (to be assigned after listing): Not available yet
NSE Code (to be assigned after listing): Not available yet

SRM Contractors Limited IPO Timeline

IPO Open Date:	March 26, 2024
IPO Close Date:	March 28, 2024
Basis of Allotment:	April 1, 2024
Refunds:	April 2, 2024
Credit to Demat Account:	April 3, 2024
IPO Listing Date:	April 3, 2024

About Company

Established in 2008, SRM Contractors Limited is a construction and development company primarily engaged in the construction of roads (including bridges), tunnels, slope stabilization works, and other construction activities in the Union Territories of Jammu and Kashmir and Ladakh.

The company operates as an EPC contractor and on a unit-price basis for infrastructure projects and subcontracts infrastructure construction projects.

Construction and development firm with a presence in Eastern India.
Operates in segments like roads and bridges, tunnels, and irrigation projects.
Claims to be pre-qualified for government tenders up to ₹30,000 lakh for EPC (Engineering, Procurement, and Construction) contracts (roads and bridges) and ₹50,000 lakh for tunnel construction projects.
Completed 37 infrastructure projects, including roads, tunnels, and bridges, since inception.

OBJECTIVE

Funding capital expenditure requirements for the purchase of equipment/machinery;
Full or part repayment and/or prepayment of certain outstanding secured borrowings availed by the company;
Funding the working capital requirements of the company;
Investment in Project Specific Joint Venture Projects; and
General Corporate Purpose.

POSITIVE

Focus on government projects: SRM Contractors focuses on government projects, which tend to be large-scale and offer stable income streams.
Pre-qualification for tenders: The company claims pre-qualification for significant government tenders, potentially giving them an edge in securing new contracts.
Experience in infrastructure development: With 37 projects completed, SRM Contractors has experience in various infrastructure segments like roads, bridges, and tunnels.
Growth potential: The Indian government’s continued focus on infrastructure development creates potential growth opportunities for the company.

NEGATIVE

Limited financial information: As the IPO is still open, detailed financial data (revenue, profitability, debt levels) is not publicly available. This makes a comprehensive financial assessment challenging.
Geographic concentration: The company’s operations are concentrated in Eastern India, which limits its market reach and exposes it to regional economic fluctuations.
Client concentration: Reliance on a limited number of clients, particularly government agencies, can be risky if project awards slow down or competition intensifies.
Execution risks: Infrastructure projects are complex and can face delays or cost overruns due to unforeseen circumstances, impacting profitability.
Competition: The construction sector is highly competitive, with established players and new entrants vying for projects, putting pressure on margins.

So, how does SRM Contractors Limited IPO Fare in Terms of Financials ?

Financial Details

Period Ended	31 Dec 2023	31 Mar 2023	31 Mar 2022	31 Mar 2021
Assets	168.87	137.36	120.22	112.47
Revenue	242.28	300.65	265.51	161.95
Profit After Tax	21.07	18.75	17.57	8.27
Net Worth	37.24	63.16	44.41	26.85
Reserves and Surplus	67.48	46.41	42.89	25.32
Total Borrowing	42.32	47.16	31.52	31.96
Amount in ₹ Crore

FINANCIAL REVIEW

Positives:

Revenue growth: Revenue has shown a steady increase year-over-year, with the most recent year (FY2023) showing a 19.5% increase from FY2022, indicating business growth.
Profitability: Profit after tax has also increased, with a 12.4% rise in FY2023 compared to FY2022, demonstrating growing profitability.
Improving net worth: Net worth has increased significantly, with almost a 60% jump from FY2022 to FY2023, suggesting improved financial stability.
Decreased borrowing: Total borrowing has fluctuated slightly but remains relatively stable, indicating controlled debt management.

SRM Contractors Limited IPO Valuation :

Earning Per Share (EPS):	₹90.82 per Equity Share
Price/Earning P/E Ratio:	N/A
Return on Net Worth (RoNW):	29.68%
Net Asset Value (NAV):	₹37.72 per Equity Share

SRM Contractors Limited IPO – SWOT Analysis

Strengths

Focus on government projects: SRM Contractors prioritizes government projects, known for offering larger scale, stable income streams, and potentially longer-term contracts compared to private ventures.
Pre-qualification for tenders: The company claims pre-qualification for significant government tenders in specific segments, providing a potential advantage in securing new contracts compared to unqualified competitors.
Experience in infrastructure development: With 37 projects completed, SRM Contractors has experience in various infrastructure development sectors, including roads, bridges, and tunnels. This established experience can be valuable when bidding for tenders.
Growth potential: The Indian government’s continued focus on infrastructure development creates potential growth opportunities for the company, particularly if they can expand their reach beyond Eastern India.

Weaknesses

Limited financial information: Detailed financial data like revenue, profitability, and debt levels are not publicly available until the IPO prospectus is released. This lack of transparency makes a comprehensive assessment of the company’s financial health challenging for potential investors.
Geographic concentration: SRM Contractors’ operations are currently concentrated in Eastern India. This limits their market reach and exposes them to potential economic fluctuations specific to that region. Diversification into other regions of India could mitigate this risk.
Client concentration: Reliance on a limited number of clients, primarily government agencies, can be risky. If project awards slow down or competition intensifies for government contracts, the company’s income streams could be significantly impacted. Expanding their client base to include private entities could offer some protection.
Execution risks: Infrastructure projects are inherently complex and can face delays or cost overruns due to unforeseen circumstances like material price fluctuations, labor issues, or permitting delays. These factors can significantly impact profitability.

Opportunities

Government spending on infrastructure: The Indian government’s continued focus on infrastructure development creates potential growth opportunities for companies like SRM Contractors if they can secure contracts for these projects.
Expansion into new markets: Expanding operations beyond Eastern India can broaden the company’s market reach and reduce dependence on a single geographic area.
Strategic partnerships: Partnering with established players in the construction sector can enhance expertise, access to resources, and potentially increase competitiveness in bidding for larger projects.
Technology adoption: Integrating new technologies like Building Information Modeling (BIM) can improve project efficiency, reduce costs, and potentially give SRM Contractors a competitive edge.

Threats

Competition: The construction sector is highly competitive, with established players and new entrants vying for projects. This intense competition can put pressure on profit margins and make it challenging to secure new contracts.
Economic slowdown: An economic slowdown could lead to reduced government spending on infrastructure projects, impacting the company’s growth prospects.
Fluctuations in raw material prices: Construction projects rely on various raw materials, and price fluctuations can significantly impact project costs and profitability.
Regulation changes: Changes in government regulations or permitting processes can create delays and increase project complexity, impacting timelines and costs.

COMPETITIVE ANALYSIS: MARKET PEERS

Here are some of the key market peers of SRM Contractors Limited IPO :

Peers:

Man Infraconstruction limited
ITD cementation India Limited
Likhitha Infrastructure Limited
Udayshivakumar Infra Ltd

SRM Contractors Limited IPO GMP

Grey market premium as on 28-03-2024 = Rs 110 / Share

Disclaimer:

IPO Grey Market Premium (SRM Contractors Limited IPO GMP) mention is valid for the specific date as mentioned in the header.
We are not buying and selling IPO forms on IPO Grey Market.
Do not subscribe for IPO by just seeing premium Price as it may change anytime before listing. Subscribe only considering Fundamentals of the companies.

SRM Contractors Limited IPO

🔴 Live Subscription Status 🔴

28/04/2024 5:00 PM

	NO OF SHARES OFFERED	Day 1	Day 2	Day 3
Qualified Institutional Buyers(QIBs)	12,40,100	1.57	2.41	59.59
Non Institutional Investors(NIIs)	9,30,000	6.32	45.61	214.94
Retail Individual Investors(RIIs)	21,70,000	3.70	14.09	46.97
Total	43,40,100	3.65	17.51	86.57

FINAL TAKEAWAY

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SRM Contractors Limited IPO Review & Details