Shriram Properties -- a part of the Shriram group -- believes its debt will come down by about 29 percent thanks to proceeds of its initial public offer (IPO). CNBC-TV18 spoke to Shriram Properties' top management as the company's shares listed on stock exchanges BSE and NSE on Monday.
Shriram Properties CMD Murali M, and Executive Director and Group CFO Gopalakrishnan J told CNBC-TV18 the company's debt, currently at Rs 700 crore, is expected to come down to Rs 500 crore from the IPO proceeds.
The company's management expects strong demand in the affordable and mid-housing segments.
“In this market where we are positioned, mid-market and affordable housing, demand is likely to stay for next 10-15 years very strongly,” said Murali.
Murali and Gopalakrishnan also said the company's debt-to-equity ratio is expected to come down further.
“We see an improving price trend in the market and that will more than compensate for cost inflation that we are seeing in some of our products. So, for a sector as a whole, we do not see big margin concerns per se; from Shriram perspective, we see further upside potential in our profitability,” said Gopalakrishnan.
The real estate developer has a run rate of one million square feet (MSF) per quarter, and its order pipeline is strong, they said.
“We have 47 million square feet of development potential out of which 21 million is launched and 85 percent of that is sold. As we progress construction, we will sell the balance of 15 percent of our inventory in the launch projects. We do not have inventory in the completed project and for the remaining projects that are getting ready for launch, we should be able to launch them over the next 2-3 years. So the growth for the next 3-4 years will be fed by existing pipeline which is committed,” Gopalakrishnan said.
Shriram Properties shares finished its listing day at Rs 99.4 apiece on BSE and Rs 98.9 apiece on NSE, a discount of around 16 percent to the issue price of Rs 118. The stock recovered some of the initial losses after starting its journey in the secondary market at a discount of 24 percent.
Prior to the listing, Shriram Properties' grey market premium (GMP) had hinted at a neutral or slightly positive debut on Dalal Street. (What grey market really is)