SRM Contractors dull listing

A new listing today and based on the moods on the Street, not surprisingly, it was lukewarm. SRM Contractors, as against the IPO price of Rs.210 and expectations of listing price of around Rs.270, the stock got listed on the BSE at Rs.225 and is now trading at Rs.236 levels.

The IPO was overall subscribed a good 86.57 times, mainly on account of the HNIs whose portion was subscribed 214.94 times. Retail investors backed it up more than QIBs at 59.59x while the latter was at 46.79x.

SRM Contractors operates in the Union Territories of Jammu & Kashmir and Ladakh, undertaking a range of civil construction projects. Its initiatives include construction of tunnels, slope stabilisation projects, roadways (including bridges), and other minor ones.

In our IPO Analysis, we had clearly stated that the last 5 IPOs, which got listed in past 10 days, were either listed flat or at discount, irrespective of business fundamentals. Moreover, SRM Contractors’ post-listing m cap of Rs. 482 cr makes it a micro-cap stock, which is not in flavor of stock markets at present. Additionally, stock will be subject to stock exchange surveillance (under ASM/GSM guidelines) post listing.

We had concluded - As pricing leaves no upside coupled with small scale of company’s operations, we recommend avoiding the IPO.