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What to do with SRM Contractors post flattish debut

SRM Contractors witnessed a flat debut on the exchanges with a modest 2.5% gain over its issue price. The listing fell significantly short of expectations as a high GMP suggested a premium of 42%.

Analysts said the strong overall subscription of 86.57 times for the IPO also added to the surprise of the flat listing.

"Despite a robust response, some investors might have found the valuation at listing less attractive also broader market conditions might have impacted investor sentiment and tempered listing gains," said Shivani Nyati, Head of Wealth, Swastika Investmart.

Keeping aside the listing gains, analysts see a compelling proposition for investors with a long-term perspective.

"The company's strong regional presence, in-house capabilities, and healthy order book remain positive points. However, a cautious approach is advisable," Nyati added.

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Its outlook is bolstered by several key strengths, including its proven track record of efficiently executing road, tunnel, and slope stabilization projects within its focused region.

SRM Contractors is involved in miscellaneous civil construction activities in the Union Territories of Jammu and Kashmir and Ladakh.

The company undertakes construction works both as an EPC contractor and on an item-rate basis for infrastructure projects. It also does sub-contracting assignments for infrastructure construction projects.

In recent years, J&K has received a boost in road infrastructure development, following the government's enhanced focus in this regard.

In FY23, the company's revenue from operations increased 13% to Rs 300 crore, while profit after tax rose 7% to Rs 18.74 crore. For the nine months ended December 2023, revenues stood at Rs 242 crore and PAT came in at Rs 20.17 crore.

Interactive Financial Services is the sole book-running lead manager for the IPO and Bigshare Services is the registrar.