Shankara Building Products’ IPO launch on 22 March at Rs440-460 per share
Shankara Building Products IPO is valued at Rs345 crore at the upper end of the Rs440-460 per share price band
New Delhi/Mumbai: Shankara Building Products Ltd, an organized retailer of home improvement and building products, announced Wednesday it would launch its initial public offering (IPO) on 22 March.
The Bengaluru-based company, which is backed by Fairwinds Private Equity, has fixed a price band of Rs440-460 per share for the IPO. At the upper end of the price band, the overall size of the offering is about Rs345 crore.
While Shankara expects to raise about Rs45 crore by selling new shares, existing investor Fairwinds Trustees of Reliance PE will sell 5.7 million equity shares. Founder and managing director Sukumar Srinivas will sell 816,252 shares through the offer for sale (OFS) route.
Shankara is divesting 25% of its total equity shares in the IPO which closes on 24 March. Fairwinds, which has 34.78% stake in the company, had invested Rs80 crore in 2011. Shankara Building plans to use Rs38 crore to retire debt and the rest for general corporate purposes.
Shankara Building Products (formerly Shankara Infrastructure Materials Ltd) filed its draft red herring prospectus (DRHP) with Securities and Exchange Board of India in September last year and received permission by the end of December.
Mint had reported in August that the company was planning an IPO of around Rs350 crore. It had previously filed a DRHP in December 2007, but did not go ahead with the offering.
Promoted by first generation entrepreneur Srinivas, an alumnus of Indian Institute of Management, Ahmedabad (IIMA), Shankara is among the bigger organized retailers of home improvement and building products in India.
“Constructing a house involves three major inputs, which are cement and steel, aggregates, which includes and bricks and sand, etc., and thirdly all the various fittings such as electrical, tiles, sanitaryware, etc. Our retail business focuses on providing customers a wide range of products encompassing cement and steel and the fittings categories,” Srinivas said, adding the company has around 74 product categories and sells over 19,000 different kinds of products at its stores.
Shankara’s range of products includes cement, structural steel, TMT bars, hollow blocks, pipes and tubes, roofing solutions, welding accessories, primers, solar heaters, plumbing, tiles, sanitary ware, water tanks, plywood, kitchen sinks, lighting and other allied products.
It also sells products under its own brands such as CenturyRoof, Ganga and Loha, apart from third party brands such as Sintex, Uttam Galva, Futura, APL Apollo and Alstone.
As of December 2016, the company had 103 retail stores in nine states and one union territory. It earns almost 40% of its revenue from its retail business.
According to Srinivas, the market for building products is worth around Rs1.8 trillion and is expected to grow at an compound annual growth rate (CAGR) of around 7% in the coming years.
“Market is expected to continue growing at a healthy rate on the back of government initiatives such as the real estate sector regulations and smart city initiatives of the government,” said Srinivas, adding that his target market areas include individual home owners, architects and small contractors.
IDFC Bank Ltd, Equirus Capital Pvt. Ltd, HDFC Bank Ltd are managing the share sale. The shares are proposed to be listed on NSE and BSE.
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