SRM Contractors Limited IPO Review & Fundamental Analysis

SRM Contractors Limited IPO

SRM Contractors Limited is coming up with an IPO worth INR 130.20 crores, consisting of a fresh issue of 62.00 lakh shares. The company plans to use the funds raised to repay the borrowings, purchase machinery, meet the working capital requirements, invest in joint venture projects, and general corporate purposes.

SRM Contractors Limited IPO – Important Dates

SRM Contractors IPO DateMarch 26, 2024 to March 28, 2024
SRM Contractors IPO Listing DateApril 3, 2024
SRM Contractors IPO PriceINR 200 to 210 per share
SRM Contractors IPO Lot Size70 Shares
SRM Contractors IPO Total Issue SizeINR 130.20 crores
SRM Contractors IPO Basis of AllotmentApril 1, 2024
SRM Contractors IPO Initiation of RefundsApril 2, 2024
SRM Contractors IPO Credit of Shares to DematApril 2, 2024
SRM Contractors IPO Issue TypeBook Built Issue IPO
SRM Contractors IPO Listing AtBSE, NSE 

SRM Contractors IPO – Company Profile

SRM Contractors is an engineering construction and development company engaged primarily in the construction of roads (including bridges), tunnels, slope stabilization 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. The company also undertakes sub-contracting assignments for infrastructure construction projects. Recently, it has also been awarded a contract for slope stabilization work in the state of Uttrakhand.

Since incorporation, the company, independently and through project-specific joint ventures, has completed thirty-eight (38) infrastructure construction projects having an aggregate contract value of ₹1,41,1.65 crores which includes thirty-two (32) roads projects, three (3) tunnel projects, one (1) slope stabilization works and two (2) other miscellaneous civil construction activities. The total order book value as of 31st January 2024 is INR 720.14 crores.

SRM Contractors IPO Review

SRM Contractors Limited’s IPO analysis reveals growth in revenue and profits, with an expanding equity base and strong liquidity, despite EPS discrepancies and a declining RoNW trend, suggesting a cautiously optimistic investment outlook in the construction sector.

Revenue Growth:

SRM Contractors exhibited growth in revenue until FY 2023 but saw a decrease by December 2023. This fluctuation may reflect project cyclicality or market conditions, indicating the need for a deeper market dynamics analysis.

Equity Expansion:

The company’s equity significantly increased, suggesting reinvestment of profits or capital infusion for growth, reflecting strong investor confidence and a foundation for future expansion.

Profitability:

Profit after tax shows a steady increase, indicating effective cost management and operational efficiency. The growing profits amidst fluctuating revenues highlight the company’s ability to navigate market challenges.

Diluted EPS:

There appears to be a discrepancy in the EPS figures, with an anomalously high value in FY2022, suggesting a potential typo or calculation error. The subsequent decrease to 12.58 by December 2023 needs clarification but seems more in line with typical values.

Return on Net Worth (RoNW):

The RoNW has decreased over time but remains substantial, suggesting efficient use of shareholder equity to generate profits, although the declining trend may need evaluation.

NAV per Equity Share:

The NAV per equity share has seen fluctuations, with a significant drop in FY2023, then an increase by December 2023, indicating changes in the company’s valuation and per-share equity value.

Asset and Liability Management:

Total assets have consistently grown, showing expansion and asset accumulation. The debt-equity ratio improvement to 0.50 by December 2023 suggests a stronger balance sheet with reduced leverage.

Liquidity:

Improvements in the current ratio indicate enhanced liquidity, with the company being better positioned to cover short-term obligations, suggesting solid financial health.

SRM Contractors Limited IPO Fundamental Analysis

ParticularAs of 31 March 2022As of 31 March 2023As of 31 December 2023
Revenue (₹ in lakhs)26,361.14 30,029.0823,455.03
Equity (₹ in lakhs)4,441.476,316.078,423.19
Expenses (₹ in lakhs)24,221.4027,560.2321,411.78
Profit and Loss After Tax (₹ in lakhs)1,756.771,874.622,107.11
Diluted EPS only (₹)1,154.1090.8212.58
Return on Net Worth (%)39.55%29.68%25.02%
NAV per Equity Share (₹)291.7837.7250.31
Total Assets (in lakhs)12,021.5913,736.1916,886.87
Total Liabilities (in lakhs) 7,580.127,420.128,463.67
Debt Equity Ratio (in times) 0.710.750.50
Current Ratio (in times) 1.562.052.16

SRM Contractors Limited IPO Peer Comparison

SRM Contractors showcases competitive strength with a high RoNW of 30.14% and an EPS of ₹90.82, outperforming peers like Man Infraconstruction and ITD Cementation in profitability, despite having lower total income than some, highlighting its efficient operational management.

CompanyTotal Income(₹ in lakhs)Face Value (₹)EPS (Basic)  (₹)EPS (Diluted)  (₹)RoNW (%)NAV per Equity Share (Basic) (₹)
SRM Contactors30,065.091090.8290.8230.14%37.72
Man Infraconstruction limited88,096.7624.474.4714.61%30.60
ITD Cementation India Limited4,70,058.0317.237.2310.04%72.04
Likhitha Infrastructure Limited 35,861.52515.2215.2224.01%63.39
Udayshivakumar Infra Ltd28,790.71102.902.9011.13%26.05

SRM Contractors Limited IPO Objective

The main objective of SRM Contractors Limited is to purchase equipment for ongoing and future projects and invest INR 31.50 crores. Additionally, INR 10 crores will repay outstanding borrowings and INR 41.50 crores will address working capital needs.

  1. To purchase equipment/machinery: The investment in capital equipment will be for ongoing projects and also for future expansion keeping in mind the development of construction activities and upcoming projects. The capital expenditure towards equipment is of recurring nature and on an ongoing basis. The company plans to invest INR 31.50 crores for the said purpose.
  1. To repay outstanding borrowings of the company: The company plans to repay certain borrowings of the company and for the said purpose it plans to utilise INR 10 crores for the said purpose. 
  1. To meet the working capital requirement: The company proposes to utilise INR 41.50.00 crores from the net proceeds towards funding its working capital requirements.
  1. To invest in specific joint venture projects: The company and Rajinder Infrastructure Private Limited have formed a project-specific joint venture with the name SRM-Rajinder Projects (“SRM Rajinder JV”). The company plans to infuse INR 12 crores for execution of the contracts awarded to the JV.
  1. General Corporate Purpose: The Company plans to deploy the balance funds towards the general corporate goals, including but not restricted to strategic initiatives, partnerships, joint ventures and strategic entity/business acquisitions, branding, marketing, and new client referral fees meeting exigencies.

SRM Contractors Ltd IPO Risks And Challenges

SRM Contractors IPO’s risks include revenue concentration in Jammu & Kashmir and Ladakh government projects, susceptible to policy changes. Seasonal fluctuations impact cash flows. Dependence on the top 5 customers poses business and financial risks.

  1. The revenue is majorly concentrated from projects undertaken or awarded by government authorities in the Union Territory of Jammu & Kashmir and Ladakh. Any adverse changes in the central policies in the Union Territory of Jammu & Kashmir and Ladakh may lead to the contracts being foreclosed, terminated, restructured, or renegotiated, which may have a material effect on the business and results of operations.
  1. The business is subject to seasonal and other fluctuations that may affect the cash flows and business operations.
  1. The company derives 81% of its revenue from its top 5 customers. The loss of any significant clients may have an adverse effect on the business, financial condition, results of operations, and prospects.

SRM Contractors Ltd IPO – Industry & Market Potential

India has a road network spanning approximately 6.4 million km, making it the second largest in the world. This network – which comprises national highways, state highways, district roads, and rural roads – carries approximately 65% of the country’s freight traffic and nearly 90% of passenger traffic. 

India also has the second largest highway network in the world4, after the United States, spanning approximately 145,000 km. The national highways however account for less than 2.5% of the total road network in India. Despite this, national highways account for 40% of the total traffic volume.

SRM Contractors Ltd IPO – Type of Offer

SRM Contractors Limited is launching an IPO valued at INR 130.20 crores, comprising 62.00 lakh new shares. The company intends to allocate the proceeds towards repaying borrowings, acquiring machinery, meeting working capital needs, investing in joint venture projects, and general corporate purposes.

SRM Contractors IPO Offer Size

The offer size of SRM Contractors Limited’s IPO is INR 130.20 crores.  The company plans to use the funds raised to repay the borrowings, purchase machinery, meet the working capital requirements, invest in joint venture projects, and general corporate purposes.

SRM Contractors IPO Allotment Structure

SRM Contractors’ allocation will be as follows: 50% for Qualified Institutional Buyers (QIB), 15% for Non-Institutional Investors (NII), and 35% for Retail Individual Investors (RII) according to SEBI regulations. A portion of the offer is reserved for market makers.

Qualified Institutional Buyers (QIB): As per SEBI regulations, 50% of the shares offered through the IPO will be reserved for Qualified Institutional Buyers. These include entities such as banks, mutual funds, and insurance companies.

Non-Institutional Investors (NII): 15% of the shares will be reserved for Non-Institutional Investors. These typically include corporate bodies or individuals investing more than Rs.2 lakhs.

Retail Individual Investors (RII): The remaining 35% of the shares will be allotted to Retail Individual Investors. These individual investors apply for shares with a total value of less than Rs.2 lakhs. 

How to apply for a SRM Contractors Works Limited IPO?

To apply for the SRM Contractors IPO through Alice Blue, you would typically follow these steps:

Open a Demat and Trading Account: If you don’t have one already, you must open a Demat and trading account with Alice Blue.

  1. Check for IPO Details: Once your account is active, you can check for the SRM Contractors IPO details in the IPO section of the Alice Blue platform.
  2. Place the Bid: Enter the number of shares you wish to buy and place your bid within the IPO’s price band.
  3. Submit the Application: Confirm all your details and submit your application.

You can apply for the SRM Contractors IPO at Alice Blue in just a few clicks!

Check Allotment Status: After the allotment process, you can check the allotment status to see if you have received any shares.

Please note that the allotment of shares is not guaranteed and will depend on the demand for the IPO.

How do you check SRM Contractors’s IPO Allotment Status?

Checking the allotment status of an IPO in Alice Blue is usually straightforward. Please follow these general steps:

  1. Log in to your Alice Blue Account: You can do this through the Alice Blue website or their trading app.
  2. Navigate to the Portfolio or IPO Section: This might differ based on the layout of Alice Blue’s platform, but generally, you can find the status of your IPO application under the ‘Portfolio’ or ‘IPO’ section.
  3. Find the IPO Allotment Status: Look for a sub-section called ‘IPO Allotment Status’ or something similar. This is where you can see the status of the IPOs you have applied for.
  4. Select the SRM Contractors IPO: If you have applied for multiple IPOs, there might be a dropdown menu or a list where you can select the IPO you are interested in. Select the SRM Contractors IPO.
  5. Check the Status: The status of your application should be displayed here. If the shares have been allocated to you, it would be mentioned here.

If you face any issues, it’s recommended that you contact Alice Blue’s customer support for detailed assistance.

Apart from Alice Blue, there are other ways to check the allotment status of the SRM Contractors IPO:

Registrar’s Website: Visit the website of Bigshare Services Private Limited, the registrar of the SRM Contractors IPO. On the homepage, look for the ‘IPO Allotment Status’ option. You must enter your PAN, application, or Demat account number to check your allotment status. Click on the ‘Submit’ button to view your IPO allotment status.

●  NSE and BSE: You can also check the allotment status on the official websites of the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). You would need your application number and PAN to check the status. 

Please note that the allotment status will only be available after completing the allotment process, a few days after the IPO window closes.

SRM Contractors  Ltd IPO Offer Registrar

The registrar for the SRM Contractors Limited IPO is Bigshare Services Private Limited. They are responsible for ensuring the IPO allotment and refund processes are carried out smoothly.

Contact information for the registrar:

Bigshare Services Private Limited

S6-2, 6th Floor, Pinnacle Business Park, 

Next to Ahura Centre, 

Mahakali Caves Road, Andheri (East) Mumbai – 400093, 

E-mail Id: [email protected] 

Website: www.bigshareonline.com

SRM Contractors Limited IPO –  FAQs 

1. What is the allotment date of SRM Contractors Limited? 

The allotment date of the SRM Contractors Limited IPO is April 1, 2024.

2. What is the price band of the SRM Contractors IPO? 

The price band of the issue is INR 200-210 per share.

3. What is the size of the SRM Contractors IPO? 

SRM Contractors Limited is coming up with an IPO worth INR 4.76 crores, consisting of a fresh issue of 6.80 lakh shares. The company plans to use the funds raised to meet the working capital requirements and general corporate purposes.

4. What is the listing date of the SRM Contractors IPO? 

The listing date of SRM Contractors’s IPO is April 3, 2024.

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