Sai Silks Kalamandir lists at ₹231, 4% premium to IPO price

Sai Silks (Kalamandir) made a decent debut on the bourses today, September 27, 2023. The stock listed at ₹231 on the NSE, a 4 percent premium to the issue price of ₹222. Meanwhile, on the BSE, it listed at ₹230.10, a 3.65 percent premium.

Sai Silks is amongst the top 10 retailers of ethnic apparel, particularly sarees, in South India in terms of revenues and profit after tax in FY22.

The ₹1,201 crore initial public offering (IPO) was open for subscription between September 20 and September 22 with a price range of ₹210-222. The issue includes a fresh share sale of ₹600 crore and an offer for sale (OFS) of up to 2.70 crore equity shares by its promoter group shareholders.

The issue was overall subscribed to 4.47 times. The qualified institutional bidders' (QIBs) allocation was booked 12.17 times, while the portion for non-institutional investors was subscribed to 2.54 times. However, the quota reserved for retail investors saw only 91 percent bidding.

Half (50 percent) of the public issue size was reserved for qualified institutional buyers (QIB), 15 percent for high-net-worth individuals (non-institutional investors), and the remainder 35 percent for retail investors.

Incorporated in 2005, Sai Silks (Kalamandir) provides ethnic apparel and value-fashion products. They include ultra-premium and premium sarees suitable for weddings, party wear, occasional and daily wear, lehengas, men's ethnic wear, children's ethnic wear and value fashion products and more.

As of July 31, 2023, Sai Silks (Kalamandir) had more than 54 stores in four southern states of India namely Andhra Pradesh, Telangana, Karnataka, and Tamil Nadu with an aggregate area of 6,03,414 square feet, as of July 31, 2023. It also offers its products through e-commerce channels including its own website and other online e-commerce marketplaces.

The company's listed industry peers are Vedant Fashions Ltd (P/E ratio of 71.29), Go Fashion (India) Ltd(P/E ratio of 87.74), Aditya Birla Fashion and Retail Ltd, Trent Ltd ((P/E ratio of 163.76), and Shoppers Stop Ltd (P/E ratio of 69.34).

For the financial year ended March 2023, the company has reported a healthy financial performance with its net profit rising 69.1 percent YoY to ₹97.6 crore, backed by strong operating performance as compared to ₹57.7 crore in the year-ago period. Meanwhile, its revenue from operations during the same period rose 19.7 percent to ₹1,351.5 crore in FY23 versus ₹1,133.02 crore in FY22.

Motilal Oswal Investment Advisors, Nuvama Wealth Management and HDFC Bank were the lead managers to the issue.

Most brokerage firms recommended subscribing to the issue on the back of its strong brand value, strong margins and a favorable return profile in recent years, sound fundamentals, and fair valuations.