Strong Listing: SRM Contractors Makes Decent Debut On Stock Exchanges; Lists At 7% Premium

Jammu-based SRM Contractors, a leading engineering construction and development company, marked its entry into the stock market on Wednesday (April 3), with a listing at a premium of 7% on the Bombay Stock Exchange (BSE). The stock, which was priced at Rs 210 per share, opened at Rs 225 per share.

The debut on the National Stock Exchange (NSE) was equally impressive, with the stock listing at Rs 215.25, showcasing a premium of 2.5%. This start positions SRM Contractors as the front runner in the mainboard segment's first listing of the new financial year FY25.

Analysts had anticipated a double-digit listing premium for SRM Contractors, given the company's robust IPO subscription figures, stellar financial performance, and successful project executions, especially in challenging terrains.

The company's initial public offering (IPO), which amounted to Rs 130 crore, witnessed healthy response from investors during its subscription period from March 26 to March 28. The IPO was oversubscribed by an impressive 86.57 times, showcasing strong support from various investor categories.

High net worth individuals led the subscription frenzy, oversubscribing their portion by 214.94 times. Qualified institutional buyers also showed significant interest, subscribing 59.59 times, while retail investors subscribed 46.97 times the allocated shares.

Prior to its listing, SRM Contractors' shares were trading at a substantial premium of Rs 95 in the grey market, indicating a potential listing gain of around 45%. The grey market serves as an unofficial platform for trading IPO shares until their official listing.

The IPO, which consisted entirely of fresh equity shares totaling 62 lakh, aimed to raise funds for various purposes including purchasing machinery, supporting working capital requirements, investing in joint venture projects, debt repayment, and general corporate needs.

SRM Contractors, primarily operating in the Union Territories of Jammu & Kashmir and Ladakh, specializes in construction projects such as roads, bridges, tunnels, slope stabilization works, and other civil construction activities. The company undertakes projects both as an EPC contractor and on an item-rate basis, along with subcontracting assignments for infrastructure projects.

The recent surge in road infrastructure development in Jammu & Kashmir, bolstered by government initiatives, has provided a favorable environment for SRM Contractors to thrive in its domain.

Financially, the company has showcased growth, with a net profit of Rs 18.75 crore in FY23, up from Rs 17.57 crore the previous year. Revenue also witnessed a significant uptick, climbing from Rs 263.3 crore in FY22 to Rs 300.3 crore.

For the nine-month period of the current fiscal year, SRM Contractors reported a net profit of Rs 21.07 crore on revenue of Rs 234.55 crore, underlining its consistent performance and growth trajectory.

Interactive Financial Services served as the sole book-running lead manager to the IPO, while Bigshare Services undertook the responsibilities of registrar.

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