What you Must know about SRM Contractors IPO?

About SRM Contractors Limited

SRM Contractors Limited, founded in 2008, is a construction and development business that specializes in the building of roads (including bridges), tunnels, slope stabilization projects, and other construction operations in the Union Territories of Jammu and Kashmir and Ladakh.

The firm is an EPC contractor that works on a unit-price basis for infrastructure projects and subcontracts infrastructure construction projects.

The corporation has the following primary business verticals:

• Road projects in the Union Territories of Jammu and Kashmir and Ladakh include the design and building of roads, bridges, and highways, as well as their maintenance.
• Tunner projects include the design and construction of new tunnels, cut-and-cover tunnels for avalanche and landslide protection, and caverns, as well as the expansion, upgrading, restoration, and/or strengthening and improvement of existing tunnels in the Union Territories of Jammu and Kashmir and Ladakh.
• Slope stabilization work includes the planning and building of reinforced embankment constructions.
• Other civil construction operations include the building of government housing and residential units, drainage, irrigation, and flood control projects.

As of March 2024, the business had completed 37 infrastructure construction projects of Rs. 77,088.00 lakhs, including 31 road projects, 3 tunnel projects, 1 slope stabilization project, and 2 miscellaneous construction works.

Highlights of the SRM Contractors Limited IPO

Here are some of the highlights of the SRM Contractors Limited IPO

• SRM Contractors IPO is a book-built issue of Rs 130.20 crores, consisting entirely of a fresh issue of 0.62 crore shares.
• SRM Contractors IPO opens for subscription on March 26, 2024, and closes on March 28, 2024. The allotment for the SRM Contractors IPO is expected to be finalized on Monday, April 1, 2024. SRM Contractors IPO will list on BSE and NSE with a tentative listing date set as Wednesday, April 3, 2024.
• SRM Contractors IPO price band is set at ₹200 to ₹210 per share. The minimum lot size for an application is 70 shares. Retail investors are required to invest a minimum amount of ₹14,700. The minimum lot size investment for sNII is 14 lots (980 shares), amounting to ₹205,800, and for bNII, it is 69 lots (4,830 shares), amounting to ₹1,014,300.
• SRM Contractors IPO has Interactive Financial Services Ltd as their book running lead manager, while Bigshare Services Pvt Ltd is the registrar for the issue.

SRM Contractors IPO allocation and lot size for Investment

For SRM Contractors IPO the net offer will be distributed between retail investors and other investors. The allocation breakdown for the overall IPO of SRM Contractors is mentioned below.

Lot sizes for Investing in the SRM Contractors IPO

SRM Contractors IPO offers a lot size starting from 70 shares, with investors able to bid in multiples of this amount. Retail investors can apply for 1 to 13 lots, while Small High Net Worth Individuals (S-HNI) have a range of 14 to 68 lots. Big High Net Worth Individuals (B-HNI) can apply for a minimum of 69 lots. The corresponding investment amounts vary accordingly, providing flexibility for different investor categories.

Key dates for SRM Contractors IPO?

SRM Contractors IPO is scheduled to open on March 26, 2024, and close on March 28, 2024. The basis of allotment will be finalized on April 1, 2024, followed by the initiation of refunds and credit of shares to Demat accounts on April 2, 2024. The listing date is set for April 3, 2024, with the cut-off time for UPI mandate confirmation being 5 PM on March 28, 2024.

In ASBA applications, when you apply for the IPO the total amount of IPO gets temporarily blocked in your bank account. However, this amount is not deducted immediately. After the shares are allotted, only the amount for the allotted shares is taken from the blocked funds. The rest of the blocked amount is automatically released back to your bank account without needing any refund process.

Financial highlights of SRM Contractors IPO

The table below captures the key financials of SRM Contractors for the last 3 completed financial years & 9 Month of recent year.

From the provided financial information of SRM Contractors Limited, we can draw the following analysis and interpretations:

1. Revenue Growth

-SRM Contractors experienced consistent revenue growth over the last two years, with revenue increasing from ₹161.95 crores in FY 2021 to ₹300.65 crores in FY 2023, marking a substantial growth of 85.52%.

However, the revenue growth rate slightly slowed down from FY 2022 to FY 2023, with a 13.99% increase compared to the previous year.

2. Profitability

- The company's profitability also demonstrated positive trends, as indicated by the increase in Profit After Tax (PAT). PAT rose from ₹8.27 crores in FY 2021 to ₹18.75 crores in FY 2023, reflecting a significant growth of 126.88% over the two years.

- Despite the growth, the rate of profit increase slowed down in FY 2023 compared to FY 2022, with a growth rate of 6.71%.

3. Asset Growth

- SRM Contractors' asset base expanded consistently over the past three years.

- This indicates the company's ability to deploy assets effectively to support its operations and potentially generate higher revenues.

4. Financial Position

- The company's net worth and reserves and surplus have also shown robust growth over the analyzed period, representing a growth of 135.18%.

- Similarly, reserves and surplus increased from ₹25.32 crores in FY 2021 to ₹67.48 crores in FY 2023, demonstrating a growth of 166.25%.

- Total borrowing increased marginally from ₹31.96 crores in FY 2021 to ₹47.16 crores in FY 2023. While the increase in borrowing indicates potential investment or expansion activities, it's important to monitor the debt levels to ensure they remain sustainable.

Overall, SRM Contractors Limited has exhibited positive growth trends in revenue, profitability, and asset base over the analyzed period. The company's strong financial position, indicated by the growth in net worth and reserves, provides a favorable outlook for its future performance. However, it's essential to monitor the company's debt levels and ensure they are managed prudently to sustain its growth trajectory.