SRM Contractors IPO: fundamentals and financials

SRM Contractors Limited, a construction and development company based in Jammu and Kashmir launched its initial public offering (IPO) on March 26, 2024. A 15-year-old company, SRM Contractors IPO comes with a lot size of 70 shares with the initial price band of 200-210 per share. This blog provides a comprehensive analysis of the SRM Contractors IPO details, the company's background, and key factors for potential investors to consider.

SRM Contractors IPO fundamentals

• Issue Size: ₹130.20 Crore (Fresh Issue)
• Price Band: ₹200 - ₹210 per Share
• Minimum Lot Size: 70 Shares
• Subscription Dates: March 26, 2024 - March 28, 2024
• Listing Date (Tentative): April 3, 2024 (BSE & NSE)
• Lead Manager: Interactive Financial Services Ltd
• Registrar: Bigshare Services Pvt Ltd

Company background: SRM Contractors

Established in 2008, SRM Contractors Ltd. specialises in constructing roads, bridges, tunnels, and other infrastructure projects in Jammu and Kashmir and Ladakh. They operate as an EPC (Engineering, Procurement, and Construction) contractor and also undertake unit-price and subcontract infrastructure construction projects.

Business verticals of SRM Contractors

• Road Projects: Construction, widening, upgradation, and maintenance of roads, bridges, and highways in Jammu and Kashmir and Ladakh.
• Tunnel Projects: Design and construction of new tunnels, cut-and-cover tunnels, and expansion/upgradation of existing tunnels.
• Slope Stabilization Works: Planning and construction of reinforced embankments to stabilise slopes.
• Other Civil Construction Activities: Building government housing units, drainage systems, and irrigation/flood protection works.

SRM Contractors IPO financials

• As of March 2024, SRM Contractors has completed 37 infrastructure projects with a total contract value of ₹77,088.00 lakh.
• They employ 275 full-time employees, including specialists and workers.
• The company's revenue increased by 13.24% and profit after tax (PAT) rose by 6.71% between FY2023 and FY2022.
• The market capitalisation of the IPO is estimated at ₹481.83 Cr.

Use of IPO proceeds

• Purchase of equipment/machinery
• Repayment/prepayment of outstanding borrowings
• Funding working capital requirements
• Investment in project-specific joint ventures
• General corporate purposes

Things to consider before you consider the IPO investment

• Regional Focus: SRM Contractors' operations are concentrated in Jammu and Kashmir and Ladakh, which might limit their growth potential compared to pan-India construction companies.
• Competition: The construction sector is highly competitive. Investors should assess the company's competitive advantages in securing future projects.
• Financial Performance: While SRM Contractors has shown revenue and profit growth, a longer track record of financial performance would be beneficial for evaluation.
• Growth Strategy: Understanding the company's plans for utilising the IPO proceeds and its future growth strategy is crucial.

Conclusion

Overall, the SRM Contractors IPO presents an opportunity to invest in a company engaged in Jammu and Kashmir's infrastructure development. However, potential investors should carefully consider the company's regional focus, competitive landscape, financial performance, and growth strategy before making an IPO investment decision.

Disclaimer: This blog is for informational purposes only and should not be considered financial advice. Consult with a qualified financial advisor before making any investment decisions.