SRM Contractors Lists at 7% Premium at Rs 225 per share on BSE and Hits Upper Circuit

SRM Contractors is a construction and development company primarily engaged in the construction of roads (including bridges), tunnels, slope stabilization works, and other construction activities, debuted on the Indian stock market today.

The stock of SRM Contractors opened at Rs 225 per share on the BSE, indicating an impressive 7% premium over the final issue price of Rs 210 per share. The market capitalisation on the BSE stands at Rs 541.94 crore. Conversely, it debuted at Rs 215.25 per share on the NSE, representing a premium of 2.50%. Furthermore, the shares of SRM Contractors hit the upper circuit limit of 5% after listing and is at around Rs 236.20 per share on the BSE.

IPO Proceeds

The company aims to use the Net Proceeds from the Fresh Issue for 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.

Business Overview

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. As of March 2024, the company has completed 37 infrastructure construction projects with a total contract value of Rs. 77,088.00 lakhs, including 31 road construction projects, 3 tunnel projects, 1 slope stabilization project, and 2 miscellaneous construction works.

Subscription details

On March 28, 2024, the final day of the IPO window, the IPO witnessed an impressive response, with a subscription rate of 86.57 times. The public issue received remarkable interest, with the retail category being subscribed 46.97 times, while the DII and NII categories reached a subscription rate of 59.59 and 214.94 times respectively.

The IPO price band was Rs 200 and Rs 210, with a face value of Rs 10 per share and a lot size of 70 shares. The total size of the company’s IPO was Rs 130.20 crore, and the final share issue price was fixed at Rs 210 each.

Conclusion

The crucial question that arises in everyone’s mind is whether to hold onto the shares or book profits. Investors who applied for listing gains only have already earned 12.50% on the listing day itself and can choose to book the profit it has generated or put a stop loss at today’s low price. On the other hand, investors with a higher risk appetite may opt to hold the shares for the medium to long term, which could prove to be beneficial.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.