Sai Silks Limited (Kalamandir) makes debut with a 4% premium on BSE

Sail Silks Limited also known as Kalamandir, engaged in the business of providing ethnic apparel and value fashion products, debuted with a 4% premium, at Rs 230 per share on the BSE. On the NSE, the stock opened at Rs 231, marking a 4% increase from its initial public offering price of Rs 222 per share.

As of the time of writing, the stock is trading at Rs 237 on the BSE, with intraday highs and lows of Rs 237.70 and Rs 230.10, respectively. The current market capitalisation of the company stands at Rs 3635 crore.

The company plans to primarily utilise the proceeds from the new issue to fund capex towards setting up 30 new stores, and two warehouses, to fund the working capital requirements of the company, to repay a certain amount of debt, and for general corporate purposes.

Motilal Oswal Investment Advisors Limited, HDFC Bank Limited, and Nuvama Wealth Management Limited are the book-running lead managers of the Sai Silks (Kalamandir) IPO, while Bigshare Services Pvt Ltd is the registrar for the issue.

Company profile: 

Sai Silks (Kalamandir) Limited, established in 2005, specialises in offering ethnic apparel and value-fashion products, drawing inspiration from India’s rich cultural traditions. The company provides a wide-ranging selection of products, including premium sarees suitable for various occasions, lehengas, men’s and children’s ethnic wear, as well as fusion and western wear for all genders.

It operates through four distinct store formats namely, Kalamandir, VaraMahalakshi Silks, Mandir, and KLM Fashion Mall. In addition to physical stores, Sai Silks distributes its products through e-commerce channels, including its website and various online e-commerce marketplaces.

As of July 31, 2023, Sai Silks operates a network of over 54 stores across four South Indian states: Andhra Pradesh, Telangana, Karnataka, and Tamil Nadu. These stores collectively span approximately 6,03,414 square feet. The company’s revenue from operations in fiscal years 2023, 2022, and 2021 amounted to Rs 13,514.69 million, Rs. 11,293.23 million, and Rs 6,772.48 million, respectively.

Let’s recap the subscription history of the company: 

On September 22, 2023, the final day of the IPO window, the IPO witnessed a subscription rate of 4.47 times. The public issue did not receive an overwhelming response, with the retail category being subscribed 0.91 times, the QIB category achieving a subscription rate of 12.17 times, and the NII category reaching a subscription rate of 2.54 times.

The company had attracted Rs 360.30 crore from various anchor investors, allocating 1.62 crore equity shares at Rs 222 per share to anchor investors.

The IPO price range was set between Rs 210 and Rs 222, with a face value of Rs 10 per share and a lot size of 67 shares. The total size of the company’s IPO was Rs 1201 crore, and the final share issue price was fixed at Rs 222 each.

Following is the financial performance of the company:

The crucial question that arises in everyone’s mind is whether to hold onto the shares or book profits. Considering the current market conditions, the broader indices have slipped from their all-time high levels. Investors who applied for listing gains have not gained much, with only a modest 4% increase on the listing day. They can choose to book the profits they have generated.

Despite the company being profitable for the last three years, the IPO has not received an impressive response from subscribers and is eventually listed with a mere 4% premium, whereas other IPOs are listing with stellar premiums.

On the other hand, investors with a higher risk appetite may opt to hold the shares for the medium to long term, which could prove to be beneficial.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.