Sai Silks (Kalamandir) IPO booked 4.4 times on Day 3; should you apply for it?

Sai Silks (Kalamandir) IPO, Sai Silks (Kalamandir)' IPO subscription status: On day 3, the Ethnic apparel retailer Sai Silks (Kalamandir)' initial public offering (IPO) received bids for 16,94,58,544 shares against the 3,84,86,309 shares put on offer, representing an overall subscription 4.4 times. While the portion reserved for qualified institutional buyers (QIBs) saw bids 12.35 times, the non-institutional investors (NIIs) category was booked 2.47 times, and the portion meant for retail investors subscribed to 0.88 times.

Sai Silks (Kalamandir)’ Rs 1,201 IPO opened for subscription on Wednesday, September 20. The bidding process for the public offer, comprising fresh issuance worth Rs 600 crore and an offer for sale (OFS) component of up to 2.7 crore equity shares by promoters and promoter entities, will conclude on Friday, September 22. Half of the public issue size has been reserved for QIBs, 15 per cent for NIIs, and the remaining 35 per cent for retail investors. Out of the QIB portion, up to 60 per cent of the portion is set aside for anchor investors.

Here are a few important details to know about the Sai Silks (Kalamandir) IPO:

Important dates: Sai Silks (Kalamandir) IPO allotment date, Sai Silks (Kalamandir) IPO listing date

The basis of the allotment of shares is set to be finalised on September 27, and the credit of shares to the demat accounts of successful bidders is expected to be finalised on October 3. Sai Silks (Kalamandir)' shares are likely to be listed on the BSE and NSE on October 4.

Issue price:

The company has fixed a price band of Rs 210 - Rs 222 per share for the IPO.

Sai Silks (Kalamandir) IPO: Book-running lead managers

Motilal Oswal Investment Advisors Ltd, HDFC Bank Ltd and Nuvama Wealth Management Ltd (formerly known as Edelweiss Securities Ltd) are the book-running lead managers to the issue.

Sai Silks (Kalamandir) IPO review: Should you subscribe to it? Here's an analysis of peer comparison and valuation

Comparing SSKL to its peer companies, the Choice Broking firm said that the company appears to hold a favourable position, particularly when evaluating its respective performances. As part of its expansion strategy involving the establishment of new stores, SSKL is poised to consistently increase its revenue, facilitating steady and sustainable growth in the long term. Thus, the brokerage has assigned a 'SUBSCRIBE' rating for the issue.

"Setting aside the challenges posed by the COVID-19 pandemic, the company has showcased impressive growth in terms of both revenue and profitability. The company’s P/E multiple at a higher price band, after adjusting for post-IPO fully diluted paid-up equity, comes out to 34.9x (to its FY23 EPS of Rs. 6.36), which seems fairly valued," the brokerage note added.

In addition, RIL Securities expects consistent growth in Sai Silks (Kalamandir)’ key metrics through its store expansion over the next few years and thus recommends a ‘SUBSCRIBE’ rating to the issue.

"SSKL intends to continue to enhance the brand recall of products through the expansion of footprint digital marketing campaigns, brand ambassador content, and outdoor advertising. This gives SSKL a strong competitive advantage in women's ethnic wear with strong margins and returns profiles over the past few years," the brokerage said in its report.

Moreover, at the upper price band of Rs 222, the issue is priced at a price-to-earnings (P/E) ratio of 27x based on the FY23 earnings per share (EPS) of Rs 8.11, analysts at Arihant Capital pegged in their report.

"The company has organically built its strengths from the ground up, which have reflected in its healthy growth in profitability and revenues over the years. The driven and skilled management has been a key reason for its success," the brokerage report said.

The analysts believe it is well poised to grow into the future given its market leadership, focus on providing good-quality products, and enhanced customer experience. The brokerage, too, recommends investors subscribe to the issue.

Sai Silks (Kalamandir)

Sai Silks (Kalamandir) has four store formats: Kalamandir, VaraMahalakshmi Silks, Mandir, and KLM Fashion Mall. As of July 31, 2023, the company had a network of 54 stores in four major south Indian states: Andhra Pradesh, Telangana, Karnataka, and Tamil Nadu, a PTI report read.

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