Saraswati IPO: The initial public offering (IPO) of Saraswati Saree Depot Ltd, which opened public subscription on Monday, received a 16.35 times subscription on the second day of bidding on Tuesday. The 160.01-crore IPO received bids for 6,75,32,760 shares as against 1,00,00,800 shares on offer.
The price band of the IPO has been fixed at Rs 152-160 per share.
According to the latest data, the retail quota received a 20.32 times subscription, while the non-institutional investors category also got a 57.19 times subscription. The QIB (qualified institutional buyers) category has been subscribed 1.32 times.
The Saraswati Saree Depot IPO will be closed on August 14. Its price band has been fixed at Rs 152-Rs 160 apiece. The share allotment will likely be finalised on August 16, while its listing will take place on the NSE SME on August 20.
Saraswati Saree Depot IPO GMP Today
According to market observers, unlisted shares of Saraswati Saree Depot Ltd are trading Rs 80 higher in the grey market than its issue price. The Rs 80 grey market premium or GMP means the grey market is expecting a 50 per cent listing gain from the public issue. The GMP is based on market sentiments and keeps changing.
‘Grey market premium’ indicates investors’ readiness to pay more than the issue price.
Saraswati Saree Depot IPO: Analysts’ Recommendations
Most analysts have given a ‘subscribe’ rating with a medium to long-term perspective. However, few have also advised investors to remain cautious about the company’s negative cash flow.
Brokeraga firm Swastika in its IPO note said Saraswati Saree Depot is a dominant player in the saree wholesale segment, characterised by a diverse supplier and customer base. Its extensive product portfolio and bulk buying capabilities provide a competitive edge. While the company has maintained stable profitability, negative cash flow remains a concern.
“The saree wholesale industry is highly competitive and fragmented, with low margins and significant seasonality. Despite these challenges, Saraswati Saree’s P/E valuation of 17.93 times appears reasonable. Considering the industry dynamics, competitive landscape, and cash flow concerns, we recommend this IPO for investors with a high-risk tolerance and a long-term view,” Swastika said.
Giving a ‘subscribe’ rating to the IPO, brokerage firm Stoxbox said, “Given Saraswati Saree’s strategic focus on strengthening inventory management, expanding into men’s ethnic wear and enhancing its e-commerce presence, we remain optimistic on the company’s growth prospects. Considering its reasonable valuation with a P/E of 17.9 times based on FY24 earnings, we recommend a ‘subscribe’ rating for a medium to long-term.”
Another brokerage Ventura Securities also granted a subscribe rating. In its IPO note, Ventura said Saraswati Saree Depot’s business model is underpinned by a diversified and well-established supply chain. The company sources its products from over 900 weavers and suppliers across key textile hubs in India, including Surat, Varanasi, Kolkata, Madurai, and Bengaluru. This extensive supplier network ensures a continuous and varied product flow.
“The company’s strong retail presence is complemented by its digital strategy; Saraswati Saree is investing in e-commerce to create an omni-channel experience, which is expected to drive growth as online sales in the saree industry are projected to increase to 9-11 per cent by FY29,” Ventura said while giving a ‘subscribe’ rating.
Saraswati Saree Depot IPO: More Details
Saraswati Saree Depot Limited, which was founded in 1996, is engaged in manufacturing and wholesale women’s apparel. Its primary business is the wholesale (B2B) segment of sarees. It is also engaged in the wholesale business of other women’s apparel, such as kurtis, dress materials, blouse pieces, lehengas, bottoms, etc.
The Rs 160.01-crore Saraswati Saree Depot IPO comprises a fresh issue of 0.65 crore shares aggregating to Rs 104.00 crore and an offer for sale (OFS) of 0.35 crore shares aggregating to Rs 56.02 crore.
Investors need to apply for a minimum of 90 equity shares and in multiples thereof. Hence, the minimum investment by retail investors would be Rs 14,400 [90 (lot size) x Rs 160 (upper price band)].
Unistone Capital Pvt Ltd is the book running lead manager of the Saraswati Saree Depot IPO, while Bigshare Services Pvt Ltd is the registrar for the issue.
Saraswati Saree Depot’s revenue rose 2 per cent, while its profit after tax (PAT) jumped 29 per cent during the financial year 2023-24.
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