Saraswati Saree Depot Lists at Premium, Hits Upper Circuit: A Promising Debut on Dalal Street

The much-anticipated initial public offering (IPO) of Saraswati Saree Depot, a Kolhapur-based saree manufacturer and wholesaler, made a strong debut on Dalal Street. On Tuesday, August 20, the company’s shares were listed at Rs 200 on the Bombay Stock Exchange (BSE), reflecting a significant 25% premium over its issue price of Rs 160 per share. Simultaneously, the stock opened its trading session on the National Stock Exchange (NSE) at Rs 194, marking a 21.25% premium over the same issue price.

A Premium Listing as Expected

The listing performance of Saraswati Saree Depot has been in line with market expectations. Prior to the listing, the company’s shares were trading in the grey market with a premium of Rs 40, signaling strong investor interest. Considering the upper price band of Rs 160, the stock was widely expected to list at a premium, and it delivered just that with a 25% gain over the IPO price.

Strong Demand Leads to Upper Circuit

Soon after the listing, the stock reached its upper circuit limit of 5% on the NSE, closing at Rs 203.70. The demand for the stock remained robust, with a bid quantity of 19,62,005 shares, almost half of the total traded volume of 39,27,000 shares on the NSE. This impressive demand has pushed the market capitalization of Saraswati Saree Depot to Rs 806.65 crore, underscoring the company’s strong entry into the public market.

A Look at Saraswati Saree Depot’s Business

Saraswati Saree Depot is well-known in the Kolhapur region for its extensive range of sarees. However, the company’s offerings extend beyond sarees to include a variety of women’s apparel, such as kurtis, dress materials, blouse pieces, lehengas, and bottoms. The company’s focus on traditional and contemporary women’s wear has made it a household name in its operating region.

IPO Proceeds: Fueling Future Growth

The company plans to utilize ₹81 crore from the net fresh issue proceeds to bolster its working capital requirements. The remaining funds raised through the IPO will be allocated for general corporate purposes, setting the stage for further expansion and operational efficiency.

Financial Performance: A Closer Look

Saraswati Saree Depot, owned by the Dulhani family, has shown resilience in its financial performance despite a challenging market environment. The company, which derives over 90% of its revenue from saree sales, posted a net profit of Rs 29.5 crore for the fiscal year 2024, representing a robust growth of 28.5% compared to the previous fiscal year. This impressive profit growth was achieved despite a modest 1.5% increase in revenue from operations, which totaled Rs 610.9 crore during the same period.

The company’s operating performance was equally strong, with EBITDA (earnings before interest, tax, depreciation, and amortization) for FY24 increasing by 18.7% to Rs 40.4 crore. This growth was accompanied by a margin expansion of 95 basis points, bringing the EBITDA margin to 6.61%, up from the previous year’s figure. These numbers reflect the company’s effective cost management and operational efficiency, which have contributed to its overall profitability.

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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.