InvestorQ : Why is SRF looking to raise fresh money in the equity markets?
indhumathi Sayani made post

Why is SRF looking to raise fresh money in the equity markets?

Answer
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2 weeks ago


SRF Ltd, which is part of the Delhi based Shriram Group, is among the leading specialty chemicals manufacturers in India. To augment its funds, SRF launched a qualified institutional placement or QIP offering to raise Rs.750 crore from institutional investors.

As per the data submitted by SRF to the stock exchanges, the floor price for the institutional sale of shares would be set at Rs.4168.73 per share. Apparently, SRF is expecting an actual placement price of around Rs.4250 to Rs.4500 for the FPO, based on institutional demand.

This pricing model is largely based on a SEBI prescribed formula. Considering the large size of Rs.750 crore on offer, the price for the FPO placement has been deliberately set at a discount to the recent closing price of SRF.

In terms of deployment of funds, SRF plans to use the proceeds from the sale of shares to finance its organic and inorganic growth plans in the future. This includes ongoing capital expenditure programs, prepayment of certain loans also full repayment of borrowings.